We often hear how damaging welfare dependency is, stifling initiative and corroding the human soul. So I worry about the way we coddle executives in their suites.
According to a study, for each dollar that America's 50 biggest companies paid in federal taxes between 2008 and 2014, they received US$27 (S$37) back in federal loans, loan guarantees and bailouts.
Goodness! What will that do to their character? Won't that sap their initiative?
The study was compiled by Oxfam America and it comes on top of a mountain of evidence from international agencies and economic journals underscoring the degree to which major companies have rigged the tax code.
Okay, okay, I know you see the words "tax code" and your eyes desperately scan for something else to read! Anything about a sex scandal?
But hold on: The tax system is rigged against us precisely because taxation is the Least Sexy Topic on Earth. So we doze, and our pockets get picked. John Oliver (host of Last Week Tonight) has a point when he says: "If you want to do something evil, put it inside something boring." The beneficiaries of tax distortions are counting on you to fall asleep, but this is a topic as important as it is dry.
It's because the issues seem arcane that corporate lobbyists get away with murder. The Oxfam report says that each US$1 the biggest companies spent on lobbying was associated with US$130 in tax breaks and more than US$4,000 in federal loans, loan guarantees and bailouts.
And why would a humanitarian non-profit like Oxfam spend its time poring over offshore accounts and tax dodges? "The global economic system is becoming increasingly rigged" in ways that exacerbate inequality, laments Mr Ray Offenheiser, president of Oxfam America.
One academic study found that tax dodging by major corporations costs the United States Treasury up to US$111 billion a year. By my maths, less than one-fifth of that annually would be more than enough to pay the additional costs of full-day pre-kindergarten for all four-year-olds in America (US$15 billion), prevent lead poisoning in tens of thousands of children (US$2 billion), provide books and parent coaching for at-risk kids across the country (US$1 billion) and end family homelessness (US$2 billion).
The Panama Papers should be a wake-up call, shining a light on dysfunctional tax codes around the world - but much of the problem has been staring us in the face. Among the 500 corporations in the Standard &Poor's 500 index, 27 were both profitable last year and paid no net income tax globally, according to an analysis by USA Today.
Those poor companies! Think how the character of those CEOs must be corroding! And imagine the plunging morale as board members realise that they are "takers", not "makers".
US companies game the system in many ways, including shifting profits to overseas tax havens. In 2012, US companies reported more profit in low-tax Bermuda than in Japan, China, Germany and France combined, even though their employees in Bermuda account for less than one-tenth of 1 per cent of their worldwide totals.
Overall, the share of corporate taxation in federal revenue has declined since 1952 from 32 per cent to 11 per cent. In that same period, the portion coming from payroll taxes, which hit the working poor, has climbed.
Look, the period of the Oxfam study included the auto and banking bailouts, which were good for America (and the loans were repaid); it's also true that the official 35 per cent corporate tax rate in the US is too high, encouraging dodging strategies. But we have created perverse incentives: CEOs have a responsibility to shareholders to make money, and tax dodging accomplishes that. This isn't individual crookedness but an entire political/economic system that induces companies to rip off fellow citizens quite legally.
It's now widely recognised that corporations have manipulated the tax code. The US Treasury, the World Bank, the International Monetary Fund, the European Union and professional economic journals are all trying to respond to issues of tax evasion.
Bravo to the Obama administration for cracking down on corporations that try to move abroad to get out of taxes. Congress should now pass the Stop Tax Haven Abuse Act, and it should stop slashing the IRS budget (by 17 per cent in real terms over the last six years).
When congressional Republicans like Ted Cruz denounce the IRS, they empower corporate tax cheats. Because of IRS cuts, the amount of time revenue agents spend auditing large companies has fallen by 34 per cent since 2010. A Syracuse University analysis finds that the lost revenue from the decline in corporate audits may be as much as US$15 billion a year - enough to make full-day pre-K universal.
Meanwhile, no need to fret so much about welfare abuse in the inner city. The big problem of welfare dependency in America now involves entitled corporations. So let's help those moochers in business suits pick themselves up and stop sponging off the government.
NEW YORK TIMES
