What are corporate tax revenues so far this year? Who's paying taxes?
Who's not? Who benefits? If the corporations don't want to pay taxes --
at any level of government -- then why don't we take them off the
roads, railways, airlines, airwaves -- that average taxpayers are paying
out the wazoo for?
In Government Posts $56.3B Surplus by Associated Press writer Jeannine
Aversa shows how The Treasury, thanks to a flood of individual income tax
receipts, posted a surplus of $56.3 billion in June and is on track to
produce another record bounty for the entire fiscal year. The
government's surplus in June was 5.1 percent larger than the $53.6 billion
surplus recorded in June 1999.
This surplus was in line with the$55 billion surplus many analysts were
expecting, and the $56 billion anticipated by the Congressional Budget
Office. Revenue for June totaled $214.9 billion, while expenditures came
to$158.6 billion. For the first nine months of fiscal 2000, which began
Oct. 1, the government is running a surplus of $176.6 billion - far
surpassing the record $124.4 billion surplus for all of fiscal year 1999.
Revenue for the first nine months came to $1.53 trillion, while spending
totaled $1.36 trillion. With the expected surplus for fiscal year 2000,
which ends Sept. 30, it would be the first time the government has reported
three consecutive surplus years since 1947, 1948 and 1949.
And lest Republican Presidential candidate George W. Bush attempt to
appropriate Republican credit for the turnaround, it is important to
remember that the one vote that broke a tie on the important Congressional
Budget Plan, up for consideration in the early days of the Clinton
Administration which led to this remarkable turnaround, was that of
Vice-President Al Gore.
The Clinton Administration is predicting a $224 billion surplus for fiscal
2000, while the CBO is projecting a slightly larger $232 billion. In
June, the biggest spending categories were: interest on the public debt,
$75.9 billion; Social Security, $43.1 billion; programs at the Health and
Human Services Department, $36.3 billion; and military spending, $28.5
billion. Revenues from individual income tax payments totaled $100.5
billion in June, compared with $93 billion for the same month last year.
Payments from corporate taxes came to $40.5 billion, up from $39.3 billion
in June 1999.
Corporations Paying Half the Taxes of Individuals While Their Profits Sizzle
Writer David Francis, senior economic correspondent for The Monitor, took
the time to trace the precise degree to which Corporate profits are
sizzling and Wall Street is cheering. Stock prices are rising again. But
Uncle Sam's not getting his full cut.
Corporate profits were up 8.9 percent in the fiscal year ended Sept. 30.
Federal corporate tax revenues were down 2.5 percent.
Indeed, corporate income tax revenues as a share of corporate profits are
sliding.
Washington has its eyes on this oddity, partly for political reasons.
Shrinking corporate tax revenues opens the door to a hot campaign issue.
Democrats could accuse the Republicans of expanding "corporate welfare"
- rewarding generous corporate campaign givers with tax breaks. That may
be one reason Bill Archer (R) of Texas, Chairman of the House Ways and
Means Committee, just announced a hearing on corporate tax shelters on
Nov. 10. Treasury will be testifying.
Last July, Treasury issued a long "white paper" that began: "The
proliferation of corporate tax shelters presents an unacceptable and
growing level of tax avoidance behavior."
The Clinton administration wants some tax loopholes closed, increased
penalties for companies using abusive shelters and penalties for their
promoters or providers, and advance disclosure of tax shelter use.
Mr. Archer described his hearing as "the latest in the committee's
efforts to stop abusive tax shelters," and claimed Congress has stopped
$50 billion in abuses since 1995.
Nonetheless, corporate tax revenues as a proportion of total corporate
profits have fallen to 21.3 percent in fiscal 1999 from 26.6 percent in
fiscal 1994. The nominal corporate tax rate is 35 percent.
Revenues actually fell last year to $184.7 billion from $188.6 billion in
fiscal 1998.
Lost revenue in fiscal 1999 alone could be $13 billion to $24 billion,
estimates Martin Sullivan, an economist writing for Tax Notes, a tax
publication in Arlington, Va.
"Lawmakers may no longer have the luxury of delaying consideration of the
tax shelter problem," he reckons.
Multinational firms are part of the story. A General Accounting Office
study found that 67 percent of foreign-based corporations are doing
hundreds of billions of dollars of business in the U.S. without paying a
penny of American income taxes.
At a Senate Foreign Relations Committee hearing Oct. 27, Sen. Byron
Dorgan (D) of North Dakota charged these foreign companies with "an
aggressive accounting scam."
Using a "transfer pricing" tactic, they move US profits out of this
country to their home base or another country with a more favorable tax
system by manipulating the price they charge themselves for the goods and
services they move among related parts of their business.
Some foreign-based firms claimed their US operations in 1998 bought
toothbrushes for $171 each and pantyhose for $38 a pair. They sold missile
and rocket launchers for $13 each and radial tires for $5 apiece.
"This is absurd," Mr. Dorgan said. He added that it may be "draining our
Treasury coffers by more than $30 billion annually."
The Senate committee is slated to meet Nov. 3 to consider approving eight
tax treaties, which aim to prevent double taxation involving both the home
nation and the US.
Dorgan would like to see such treaties include a "formular" approach to
avoid the complex transfer-pricing problem. It would look at sales and
assets for allocating profits between countries for tax purposes.
It is the domestic tax situation that's getting the most attention.
Recently, when the Senate passed a bill extending $8.5 billion in
corporate tax breaks for a year, House minority leader Richard Gephardt
said: "The people who get the real treats are corporations and the wealthy..."
Actually, the Senate "paid for" the extensions by cutting other company
tax breaks.
The House Ways & Means Committee also is weighing a plan for extending six
expiring corporate tax preferences. Bob McIntyre, director of Citizens for
Tax Justice, a Washington group, calls the $20.9 billion, five-year
proposal "corporate welfare."
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