Internal documents acquired by ThinkProgress Green reveal that the climate-denial think tank Heartland Institute received funding from at least 19 publicly traded corporations in 2010 and 2011. The companies’ combined contributions exceeded $1.3 million for an array of projects. As Think Progress Green reported on Tuesday, the Heartland Institute’s projects included a secret plan to teach children that climate change is a hoax.
The companies backing the Heartland Institute:
Some companies have issued statements about their contributions, but none have committed to ending their support for the Heartland Institute.
“Diageo provided a small contribution (nearly two years ago) to Heartland Institute – related to an excise tax issue,” a spokesperson said. “We vigorously oppose climate skepticism and our actions are proof of this. We will be reviewing any further association with this organization.”
While disavowing climate denial, Microsoft has indicated no intention to stop its in-kind tax-deductible contributions to the think tank.
“GSK absolutely does not endorse or support the Heartland Institute’s views on the environment and climate change,” a Glaxo Smith Kline spokesperson said. “We have in the past provided a small amount of funding to support the Institute’s healthcare newsletter and a meeting.”
Asked about the contributions, General Motors defended the Heartland Institute as “careful and considerate,” even though the radical think tank has accused “Government Motors” of “corporate welfare-sucking” and told people to “never again buy a GM car or truck.” Forecast The Facts has established a petition to GM asking them to stop funding climate denial.
You might be wondering why if you paid federal income tax, you paid more than 30 Fortune 500 companies combined over the last three years. They got to pay zero dollars in taxes (some of them even got money back), but not because they were broke; in fact, they made $160 billion in profit over the last three years. As to the “why”, well, way back in 2001, our fearless decider George W Bush enacted a series of tax cuts and changes that opened more loopholes to corporations. In fact, by 2003, the number of no-tax companies jumped from 33 to 46, an increase of 40%. The next time someone asks you what the 99% want, you might remind them of this outrageous fact.
See, it wasn’t always this way.
On Rachel Maddow last week she talked about a new report that showed that Warren Buffett was on to something when he demonstrated that he paid 17.7 percent in total taxes (payroll plus income), whereas the average for his office was 32.9 percent. In fact, there are 30 Fortune 500 companies that paid zero taxes or less for the last three years. If you paid federal income tax in the last three years, you paid more than Wells Fargo, General Electric, Verizon, Boeing, DuPont, Duke Energy, PG&E, and Wi Energy company combined.
A new report out today shows that Warren Buffett is not alone in scoring a way sweeter deal on his taxes than, say, his receptionist. At least 30 Fortune 500 companies paid zero taxes or less for the last three years. Or less means sometimes the government pays them. Over those three years those 30 Fortune 500 companies made $160 billion in profit. But they still paid zero federal income tax. Or even less than zero.
If you paid anything in federal income taxes over the last three years, you personally as an individual human paid more federal income tax than Wells Fargo, General Electric– hi, boss — Verizon, Boeing, DuPont, Duke Energy, PG&E, also that Wi Energy company that dumped this crap into Lake Michigan this week — you paid more than all those companies combined.
So, if Wells Fargo was considering turning itself into you, one of the down sides for Wells Fargo of doing that is that you actually pay more income tax than they do as a company. But today at the G-20, another zillionaire took your side in this anyway. Bill Gates today urging the world’s 20 major economies to support the popular idea of a financial transaction tax.
We used to have one of these in this country from 1914 to the mid ’60s. Then they repealed it. The basic idea is a very, very small tax, something like a quarter of a percent, on financial trades.
Rachel went on to argue the merits of imposing a financial transaction tax, something supported by such varied interests from Democrats Tom Harkin of Iowa and Representative Peter DeFazio of Oregon (who have introduced a bill that would reinstate the financial transaction tax in this country) to the Pope. Yes, the global financial tax has global support and it would be an excellent rallying cry for the 99%.
However, even as we center around a proposed solution to the problem, a fact that must not be skipped over is the fact that you and I pay more in taxes than 30 specific Fortune 500 companies combined. The next time someone asks you what the 99% want or calls this a class war, this one single statistic answers that question.
I support the American Jobs Act and the proposed .5% increase on taxes for the top 1%, but it’s important to note that companies need to start paying their fair share, and contributing just like the 99% do to our revenue (and hence deficit) problem. Raising the tax rate does not solve the problem if the loopholes are still in place.
This is nothing new. The 2001, 2002, and 2003 tax cuts created a tax system custom made for greedy Scrooges who didn’t mind screwing the average American citizen in order to grow their own wealth. According to Reclaim Democracy.Org, the gap between the statutory and effective tax rates for corporations widened by a fifth between 2001 and 2003 (hello trickle down “job creators” tax breaks):
Corporations are supposed to pay 35% of their profits in income taxes, but between the years 2001 and 2003, only a small amount of profitable Fortune 500 companies actually paid that amount. In fact, the effective tax rate (versus the statutory tax rate of 35%) for 275 profitable Fortune 50 companies dropped by a fifth from 21.4% in 2001 to 17.2 % in 2002-2003.
Even more staggering are the following statistics:
• In 2003 alone, 46 companies paid zero or less in federal income taxes. These 46 companies told their shareholders they earned U.S. pretax profits in 2003 of $42.6 billion, yet they received tax rebates totaling $5.4 billion. Almost as many companies, 42, paid no tax in 2002, reporting $43.5 billion in pretax profits, yet receiving $4.9 billion in tax rebates. From 2001 to 2003, the number of no-tax companies jumped from 33 to 46, an increase of 40 percent.
• In 2001, the Treasury paid corporations $40 billion in tax refunds, a third more than the 1998-2000 average.
• Then in 2002 and 2003, after the law was changed to expand tax subsidies and make it easier for corporations to carry back excess tax breaks to earlier years, corporate tax refunds skyrocketed to an average of $63 billion a year – more than double the 1998-2000 average.
So, starting in 2002, after the law was changed, corporations’ tax refunds doubled to an average of 63 BILLION dollars a year. Loopholes and tax breaks cost the federal government more than $1 trillion a year in lost revenue. Two wars were also started during this time, and left off of the budget, lest anyone is wondering how we got into the deficit we are currently facing.
Any business owner knows that if you cut revenue and buy (on credit/loan) a bunch of expensive stuff that isn’t even for your company (and thus is not building your company or its assets in any way) – but say, your company is buying stuff to help the company your parents own, eventually your company will be forced to pay the piper. The difference is that if you are a small business owner, you don’t get to hand your business over to your sworn enemy after hiding the real numbers and then gloat from the corner as they realize how you just screwed them but good.
And that’s just one reason why the Republican belief that the country should be run like a business is flawed. If they were running a small business, they’d be accountable. Perhaps when Republicans run the country they run it like a too big to fail conglomerate. We see how free markety that model is not.
The bottom line is that companies use the same resources as we do, in fact they use more of them, yet they often don’t pay the statutory tax rate and some of these companies got money back from the government, even as they made profits. It’s glaringly obvious that we need tax reform to close the loopholes for corporations.
Many Democrats have proposed closing these tax loopholes, only to be shot down by the defenders of “job creators”/corporate puppets; aka, Republicans. President Obama is focusing on closing loopholes, but he’s getting a lot of push back from congressional “conservative” Republicans (conservative is in quotes because a real conservative would not try to run a business like this). These same people must be intentionally forgetting thatReagan signed tax reform into law on October 22, 1986 that raised taxes on corporations while decreasing taxes overall on individuals resulting in what is referred to as “revenue neutral” change.
Today, when Republicans talk about “revenue neutral” they mean just the opposite; they are protecting the corporations at all costs. It’s important to note, however, that within individual income taxes, Reagan raised the taxes on the lower incomes and lowered them on the top incomes — hence his status as beloved savior of the wealthy (this is the only time in history that the top personal income tax was lowered while the bottom got the shaft at the same time). But Reagan did increase taxes on corporations. Of course, corporations were less powerful then than they are today (as noted by a Republican raises their taxes).
Based on his books, President Obama is a strong believer that the government should be responsive to the people rather than the people responsive to the government. For example, Obama doesn’t think elected officials should use their office or the people use the courts to force change based on an ideological agenda that is not supported by the people. This is what he meant when he told us, “Make me do it.” Obama, as a constitutional lawyer, believes more strongly in the organic process of the people calling for the change, demanding it, and laws following naturally from public support such as the growing Occupy USA movement.
Occupy USA is making our voices heard, calling for and demanding changes in the tax laws and overall economic justice for the 99%. The louder the 99% is the more likely we are to be heard over the big money of corporations. The fact that we pay more in taxes than 30 specific Fortune 500 companies combined, whose profit over that time period was $160 billion, is an outrage. Where are the shared sacrifices?
The 99% want their country back, and by back, they mean before Reagan screwed the bottom income levels. But we’ll take Reagan’s stance on corporate taxes if that’s what it takes to get a little fairness up in this house. Close the loopholes!
Take a moment and think about how you feel wealth should, ideally, be spread among the American people.
If you're like the average respondent in a 2010 Harvard Business School/Duke University study, your response was this: The richest top 20 percent of society, as determined by net worth, should control 32 percent of the wealth. The bottom 20 percent should control about ten percent. And the rest should be spread out among the 60 percent in the middle, with higher-earners taking a slightly larger share.
It probably won't surprise you to hear that those figures don't match reality. But you might well be shocked by just how far off they are. In the study, Americans were asked how they thought wealth was actually distributed; they estimated that the top 20 percent controlled about 59 percent of the nation's wealth, while the bottom controlled about three percent.
That wasn't even close: In reality, the top 20 percent controlled about 84 percent of the wealth, while the bottom quintile controlled just 0.1 percent. The combined net worth of the bottom 40 percent, in fact, accounted for just 0.3 percent of the nation's wealth. (See chart below, where that bottom 40 percent doesn't even show up.)
It's not just wealth. In 2007, U.S. income inequality hit its highest mark since just ahead of the Great Depression in 1929. And that was before the current recession brought joblessness and financial peril to scores of Americans, most of whom are on the wrong side of the wealth divide.
According to the CIA's World Factbook, the United States now ranks 39th in the world when it comes to income inequality. What that means is that only 38 out of 136 countries have a less equitable distribution of income than the United States; the list of countries with a more equitable income distribution includes Iran, Russia, Turkmenistan and Yemen.
The financial gap has been widening. As economist Joseph Stiglitz documented in Vanity Fair in May, the top one percent of Americans have gone from taking 12 percent of the nation's wealth 25 years ago to taking nearly a quarter today. Over the past decade, the income of the top one percent has risen 18 percent; the income of Americans in the middle, meanwhile, has fallen.
And consider this: As of 2009, according to Politifact, the net worth of the nation's 400 wealthiest Americans was higher than the net worth of the bottom 50 percent of the nation's households.
"We have this growing elite that makes the economy of the United States look more like a banana republic than an economic democracy," says Democratic Rep. Jan Schakowsky of Illinois.
There isn't a one-sentence explanation for why America's wealth gap is far wider than Americans say they want it to be - and why it is growing ever wider. But a good place to start is with the decisions made by elected officials in Washington, many of whom are themselves in the top one percent.
Those decisions tend to follow the desires of the affluent. In his 2008 book Unequal Democracy, Vanderbilt political scientist Larry Bartels looked at how senators responded to the preferences of their constituents. Bartels found that senators are "fairly responsive" to the preferences of those in the upper third of income distribution, less responsive to those in the middle third, and "not at all responsive to the preferences of constituents in the bottom third of the income distribution."
In other words, the data suggested that if you're in that bottom third in terms of income, it really doesn't matter what you think - your senator effectively doesn't care.
A bias toward the desires of the wealthiest Americans has resulted in policies that critics say exacerbate the wealth and income divide - among them reduced capital gains tax rates, deregulation of the financial system and a reduction of tax rates on high earners. They say many politicians largely serve the wealthy and leave those on the bottom behind, pointing out that the minimum wage is currently lower than it was 30 years ago after accounting for inflation.
The growing wealth gap is "not an accident or a force of nature, it's clearly the result of public policy," says Schakowsky.
The Illinois lawmaker acknowledges that her party deserves some of the blame - in 1999, for example, many Democrats voted for the repeal of the Glass-Steagall Act separating commercial and investment banks, which most economists say contributed to the 2008 economic meltdown. (Schakowsky did not vote for repeal.) But she says Republicans are largely responsible for the widening income gap, pointing to a policy-based "attack on organized labor" and other initiatives.
"I would say that much more of this has to be laid at the feet of Republicans," she said. "Surely the way out is being blockaded by the Republicans. I don't know that there's any economist right now that would say it's more important to reduce the debt and deficit then to spend and create jobs and stimulate the economy. It's just wrong."
(Credit: AP Graphics Bank)
Schakowsky introduced a bill earlier this year to increase marginal tax rates for those making more than $1 million to 45 percent, with the marginal rate going up to 49 percent for income over $1 billion. "We need tax fairness in this country, and the Republicans right now are on a crusade against low-income people," she says.
Conservatives reject this formulation. Kevin A. Hassett, a senior fellow at the American Enterprise Institute, says the focus should be poverty, not inequality; he calls it "immoral" and "unethical" for Democrats to push a "spread the wealth philosophy." Hassett points to Democratic efforts to increase the top marginal tax rate in individuals -- a position some Republicans have deemed "class warfare."
"When you put a high top rate in it will cause economic damage, and that income damage will tend to impact people on the bottom end of the income distribution because they're the most vulnerable," he said. In pushing for an increase in taxes on high earners, he said, Democrats are making a "calculated appeal to the median voter's greed" - and are putting politics "ahead of social justice."
Douglas Holtz-Eakin, the former director of the Congressional Budget Office and chief economic policy adviser to John McCain's 2008 presidential bid, argues that globalization - not congressional policy - has been the key force in exacerbating the wealth and income gaps. When the labor force became "flat" in the 1990s, he said, the economic value of Americans near the bottom of the economic ladder decreased.
"If you bring in billions of new low-skilled laborers into the world economy, the relative value of low-skilled workers go down," said Holtz-Eakin. "I don't think there's anything about a tax policy that's going to undo that. It's a global force." Holtz-Eakin argues that instead of "economically damaging redistribution policies," Congress should be focused on improving education so that low-skilled workers have financial capital.
In their 2010 book "Winner-Take-All Politics," political scientists Jacob S. Hacker and Paul Pierson examined the structural methods through which Washington produces policy that benefits high-income Americans. The key, they found, was the organized pressure put on lawmakers - which includes lobbying, campaign contributions, ginned-up "grassroots" movements and implicit or explicit threats to support rivals.
"Congress is really often responding to organized pressure," Pierson says. "So organization matters enormously, and that has an implication for inequality because businesses and the affluent tend to be a lot more organized than anybody else."
Organized pressure is one reason the government is legally prohibited from bargaining with the pharmaceutical industry over drug prices despite being the largest purchaser of its products; such pressure also helps explain why the Defense Department's budget has spiraled from $51 billion in 1963 to more than $700 billion today.
Former New York Democratic Rep. John Hall, who lost his seat in the 2010 midterm elections, said the pressure on lawmakers to court affluent interests - and craft policy that will make them happy - is intense.
"I would guess that the average member of the House spends at least 30 percent of their time doing fundraising," said Hall. "And it starts right after the election."
He says lawmakers are constantly cultivating "lobbyists or other people who have a lot of money" in order to get reelected, arguing the process "just skews the democracy from one man/one vote to one dollar/one vote."
The situation came under some scrutiny in 2008, when lawmakers' sanctioning of a deregulated financial system resulted in a worldwide economic breakdown and a recession that has endured to this day. Anger over that event - and the bailouts that followed - gave rise to the Tea Party movement, which ostensibly reflected voter anger at a political system corrupted by influence.
But according to Pierson, all voter anger has done is "empower people who are doing everything they can to make inequality worse." The Republican candidates for president - most of whom claim Tea Party allegiance - are now calling for increased taxes on the poor and reduced taxes on the rich. And they want to repeal the Dodd-Frank Wall Street reform bill meant to provide some protection to consumers from the excesses of a deregulated financial industry. (It should be noted that conservatives like Hassett would argue these actions actually help the poor by reducing the tax burden on job creators and eliminating regulations that can hamper productivity.)
Mitt Romney, one of the frontrunners for the GOP nomination, unveiled a job-creation plan Tuesday that eliminates capital gains taxes on many taxpayers and opposes union interests; his chief rival, longtime Texas governor Rick Perry, touts his economic record while presiding over a state with the fourth-highest poverty rate and the highest-percentage of minimum wage jobs in the nation.
Last January, the Supreme Court eliminated restrictions on the right of corporations to spend unlimited amounts on politics, making it easier for wealthy organizations and individuals to apply pressure to lawmakers. The 2012 election cycle has seen the rise of so-called "Super PACs," massive political action committees raising tens of millions of dollars to help candidates win elections.
Meanwhile, outside groups like Crossroads GPS serve as a conduit for anonymous donors to pour further millions into the political system each election cycle - and their influence can often decide which candidate makes it to Washington. Schakowsky says the influx of hundreds of millions of dollars into the political system explains why many Americans cast ballots for lawmakers who back policies that widen the wealth and income gap. "The electoral environment is very skewed right now to the wealthiest Americans," she says.
Pierson argues that since it's effectively impossible to get money out of politics, the best hope for the middle and lower classes is to organize and exert pressure that counterbalances the influence of the wealthy. Some such groups, like the AARP, already exist, and organized labor has long been a major force in politics -- though the labor movement has suffered a decades-long decline in membership and influence. Asked if the wealth gap could get wide enough to spur more Americans to organize to counterbalance the influence of those at the top of the ladder, Pierson was pessimistic.
"I'd like to say yes to that," he said, "but there's nothing in the experience of the last couple of decades that makes me confident that when people get frustrated they'll produce the kind of politics that are going to reverse things."
Big corporations in the United States need to be careful what they wish for. Starbucks CEO Howard Schultz announced over 100 companies have pledged to withhold political donations until Congress and President Obama figure out how to solve the debt crisis.
There's only one problem with their plan. A compromise might include raising taxes on the rich. Many CEOs make over $250,000 per year , an income tax bracket targeted by President George W. Bush for tax relief in 2001. Obama wanted to increase taxes on the wealthiest two percent of Americans by letting the Bush-era tax cuts expire. Instead, Obama had to compromise as Republicans held jobless benefits hostage until he agreed to keep tax rates the same.
Now business leaders want politicians to solve the national debt. Their cry will be heard by both Democrats and Republicans. The GOP will say taxes need to be lower on these corporations, which means budget cuts will have to go deeper. Another solution would be across-the-board tax increases for all Americans instead of just singling out the rich. A third possibility means a combination of more taxes and less spending.
Everyone is fed up with partisan bickering in Washington. The pledge signed by business leaders means nothing as they can choose to contribute limitless amounts of campaign cash to any candidate they see fit. It will be interesting to see which side feels the most threatened by the pledge. Unlimited campaign funds seems to favor Republicans as Mitt Romney was given $1 million by a political action committee. The 2010 mid-term elections also favored much more money raised by GOP candidates.
There is also an advantage in campaign spending when it comes to Obama's run for re-election. He is an incumbent who doesn't need to fight opponents in his own party in a primary election. He can wait until August when a party nominee is decided by voters. If Republicans are already strapped for cash and corporations withhold even more until the debt crisis is solved, the primary season in January may be the key starting point for getting things done in Washington, D.C.
Voters will find out just how much the business pledge means when the Federal Election Commission publishes donations to each candidate every quarter. My bet will be GOP candidates will see a decrease or slow down in campaign finances. Grassroots campaigns may be back if candidates can't get as many donations from large companies.
