“Back in 2008, when gas prices hit $4 per gallon for the first time and Exxon reported the largest quarterly profit ever, politicians summoned their outrage and revived the President Carter-era idea of slapping a tax surcharge on oil companies whose profits seemed excessive,” Rick Newman writes for Yahoo Finance. “A majority of Americans supported the idea and so did 51 senators, but that wasn’t enough to satisfy arcane Senate voting rules and turn a windfall-tax bill into law.”
“Gas prices plunged later that year as a recession throttled the economy. Then a funny thing happened: Americans seemed to lose interest in hiking taxes on big business, even during a recovery that pushed corporate profits to new highs but kept punishing middle-class families. Now, President Obama is pushing for new corporate taxes as part of his plan to fund new infrastructure and give working families a boost. But with tepid support among voters for any tax hikes at all, Obama’s plans seem like a legislative long shot,” Newman writes. “The most obvious shift from pre-recession days is that Apple, not Exxon, is now America’s most profitable company. And there are precisely zero calls to impose a windfall tax on Apple, even though its 2014 net income of $39.5 billion was close to Exxon’s peak profit of $45.2 billion in 2008,” Newman reports. “Apple could very well exceed the Exxon figure in 2015, the first year the company’s earnings will reflect blowaway sales of the new iPhone 6 and 6 Plus, as well as the much-awaited watch that’s coming this year.”
“Public support for higher corporate taxes peaked in 2008, when 73% of poll respondents told Gallup that taxes on corporations were too low. In the latest poll, just 66% feel that way. Obama’s plan to impose a new tax on the overseas profits of U.S. firms and close other loopholes will highlight the many tax breaks that companies get, but Congressional Republicans seem certain to oppose many, if not all, of Obama’s proposals,” Newman writes. “There may still be some effort this year to simplify the corporate tax code, but big business itself opposes many of the so-called reforms that close loopholes—since closing loopholes is the same as eliminating tax breaks businesses lobbied very hard to get in the first place. A populist uprising might pressure Congress to act, but there’s no such thing on the horizon. When gas is cheap, everything is just fine in corporate America.”
Read more in the full article here.
MacDailyNews Take: Results for the cited Gallup poll were based on telephone interviews conducted April 3-6, 2014. The margin of sampling error is ±4 percentage points at the 95% confidence level. So, that’s quite a lot of verbiage from Newman attempting to describe a so-called change of attitude that actually amounts 6 percentage points and a margin of error of ±4 percentage points from a 10-month-old telephone poll in which 2/3rds still think that more corporate taxes are a good idea. (This article is headlined “Americans lose interest in hiking corporate taxes” over on Yahoo Finance.) You could just as easily say that Americans’ interest in hiking corporate taxes may be up slightly since 2010 (within the margin of error, though, so nobody’s sure). Here’s Gallup’s graphic:
That said, it’s all too easy for some to respond “yes, tax corporations more!” without considering the full ramifications that could result, including job cuts (and the attendant results: unemployment benefit payouts, loss of income tax revenue, etc., etc. etc.) and higher prices for consumers, to name just two biggies.
Here’s Apple CEO Tim Cook on the issue of U.S. corporate taxation:
Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth. – Apple CEO Tim Cook, May 21, 2013
[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]
Related articles:
U.S. Congress, Obama take Apple CEO Cook’s advice, eye corporate tax changes – February 3, 2015
Obama targets foreign profits with tax proposal, Republicans skeptical – February 2, 2015
Senator Rand Paul finds Democratic partner for tax repatriation holiday – January 30, 2015
Businesses hopeful Republican control of U.S. Congress will break tax-reform gridlock – November 5, 2014
Not in Taxes anymore: On site at Apple’s famous Irish ‘headquarters’ – November 2, 2013
Regan: U.S. tax code spurs loveless foreign corporate ‘marriages’ – May 13, 2014
Ireland to close Apple’s tax loophole, but leave bigger one open – October 15, 2013
G20 think tank OECD proposes blueprint for global crackdown on tax avoidance – July 19, 2013
Thomas Sowell on Apple, corporate taxes, and ‘the road to serfdom’ – May 28, 2013
Taxing Apple just taxes you – May 24, 2013
Don’t tax Apple, tax its shareholders – May 24, 2013
If Apple paid more tax, we might pay less or something – May 22, 2013
Apple CEO Tim Cook pounds another nail into the Keynesian coffin – May 22, 2013
Apple CEO Cook makes no apology for company’s tax strategy – May 22, 2013
Gas prices are still too high. Needs to be around 1.20 a gallon. Period.
I remember that days of 17 cents a gallon and a minimum wage of $1.25 per hour.
Hey Silverhawk1,
I didn’t know you were that young!
I also remember 17cent days. In Florida to encourage tourism, gas was tax free for 11 cents a gallon.
By the way, I was was paid $100/month at that time when I was an intern
I meant Intern in Medicine!
Dudes! You guys are old! The lowest I can remember gas was 25 cents a gallon and that was before I was a teen driving all over the place with a minimum wage job paying around $5/hr.
I regret that my state has made it very difficult for my teenagers to get minimum wage jobs. It is a sad state of affairs when most minimum wage earners are adults! In my day, teens and adults with less than 6 months on the job were the only ones earning minimum wage.
Comprehensive corporate tax reform, better late than never. Six years ago, when our economic ship was sinking, our President should have taken command and created some pro-growth policies. Billions (whoops, that’s Trillions!) in spending alone did not re-start the economy. Zero interest rates alone did not re-start the economy. The middle class continues to suffer for these bad policy decisions. Comprehensive corporate tax reform is pro-growth. Do it now! Better late than never.
What seemed by far most obnoxious and the epitome of pure, uncontrolled greed, was the gas prices following the greatest economic recession in living memory. Unlike pretty much every living person on the planet, who were struggling to hold on to a job and provide for the family, Exxon-Mobile (and a few other oil companies) were reporting record profits. While there was a retail price drop for a few months in mid-2008, it quickly recovered, and the oil companies continued clocking records, at the expense of everyone else.
There are market forces at play that determine the oil prices, but when it comes to oil, the market is certainly not quite free (nor open), and the producers have a great deal of influence on the final price. About the only way possible to mitigate that excessive greed was to simply tax the hell out of it.
Confused author states: “Then a funny thing happened: Americans seemed to lose interest in hiking taxes on big business, even during a recovery that pushed corporate profits to new highs but kept punishing middle-class families. ”
Actually, what happened was very sensible. Most
Americans (apparently the author is not amongst them) understand that raising corporate taxes, which are already highest in the world, just drives jobs overseas and drives profits to foreign subsidiaries.
Most Americans have a clue. The author should get a clue too. Is the author stupid, or just a hit whore provoking sensible people in order to score clicks?
I’ll tell you what drives U.S. jobs overseas even more than high taxes – the minimum wage.
Imagine that all those factories in China had been built and staffed in the U.S. instead because U.S. companies could hire laborers at true market wages. Each one of those low wage jobs would also require higher wage jobs to design, build and operate those factories. Imagine the infrastructure that would have been built to support those factories and the workers (both low and high wage). Imagine how much bigger existing businesses would have been that supported that infrastructure. Imagine that entire new markets would have been developed to cater to the large numbers of assembly line workers with inexpensive food, health care and housing, because if there’s a way to make a buck filling a need some enterprising individual will find it. Imagine what kind of tax base the U.S. would have.
That is the grand opportunity lost for the misguided want of a minimum wage. Sadly, the U.S. still has its share of the desperately poor. The minimum wage hasn’t fixed that.
Job cuts vs tax rates… lol
That’s fear mongering. The point I am trying to make… While the largest employers in the 40s – 70s were the likes of GM, IBM, and other union and high skilled workers. The current trend for the largest employers is Walmart, and other low skilled service industries.
People wonder where the middle class went. Does anyone under stand, the middle class is the basses for a stable society? If you have an underpaid population, you WILL have a revolution. Not necessarily because the poorest people will revolt, but because they will be duped into revolting.
Higher taxes should not result in job cuts, because taxes should be based on profits, not business expenses. Its a tax of disposable income. Simple as that. If you roll profits back into the company, how is it possible you would have to cut jobs?
Something interesting is floating around the Internet lately. Specifically a Canadian experiment, done in the 70’s that guaranteed a minimum income (not wage) for an entire town. It was called BIG (Basic Income Guarantee). This is lauded by the Right, because it’s a no strings attached form of social security. If you want more money, you work harder, no one will take BIG away. For the town, it wiped out poverty for 4 years. Then it was shuttered and buried. hmmmm… I would like to know why. As they dig into the results of the experiment, there was more of an incentive to work, than to be lazy. Women who wanted to stay home and take care of small children, did so, with less stress, and dramatically improved family care. Health benefit costs plummeted. So… What’s wrong with that?
Anyway, something up… I have said this before, in some words or another, everyone needs to pay a fair share for taxes, and no one gets a free lunch. You work and you contribute, for the better of all of us. We just have to agree on a fair amount. But we take care of each other to make sure all our needs are met.
They should have a question about Basic Income Guarantee in one of the Republican Primary Debates. Should thin the field by exploding a few head right on the spot.
Common sense needs to intervene here – clearly corporations aren’t paying their fair share of taxes compared to middle class folks. They don’t need to be gouged, but their taxes should be in line with what most people pay.
There is no such thing as corporate taxes! Individuals pay them as they consume products and services. The current tax system as it stands is regressive because that hidden consumption tax disproportionately affects those individuals and families with less money.
All it takes to see the fallacy in your argument is looking at revenue and cost curves on the same axes. It’s routinely done in business maths classes. You should take a look at those sometime.
I’m not sure what kind of logic lead you to make that statement. I can only assume you either misunderstood the implications of what I was saying or you haven’t thought it through. Despite the current tax code, businesses are not people. You tax my employer, either my paycheck is less, which is an indirect tax on me, or my employer raises the price of their product to compensate, which is an indirect tax on the product buyer. Usually, it’s a bit of both. This is simple logic. No chart is going to say otherwise.
So why don’t you take your logic a bit further, jwsc01? If all corporations merely pass on all taxes to consumers, then wouldn’t it be GOOD to drive US corporations to be more efficient by taxing them and reducing income taxes on individuals? Then the most efficient companies would be rewarded. The most intelligent people of the world would want to work for the best companies, which would be here.
Minimizing tax rates to arbitrary levels is a fool’s errand. The key is to cover national expenses in a way that establishes a fair playing field. The problem today is that accrued debts from decades of overspending is burdensome, and the USA does a crappy job of managing fair tariffs on imported goods that are produced with near-slave labor with zero environmental law. That junk needs to be taxed into oblivion so that Americans can get back to work building durable high-value goods. Meanwhile China and other trade sharks block US goods from entering their market unless it was produced on Chinese soil. That’s a completely unfair trade model but it has been accepted by all western corporations and their congressional lackeys.
There never was and never will be truly “free trade”, and the sooner we implement fair trade rules with intelligent duties and tariffs, the sooner the American middle class will be able to have opportunities that countries like Germany offer their citizens. But as long as WalMart writes US tax code, watch as American incomes erode away until they equal the wages that China or Malaysia offers.
Well, I think you completely missed my main point, that it is the individual which will always end up paying taxes one way or another.
Nevertheless, that’s an interesting idea to tax corporations more and individuals less. If we take that further and say that individuals pay no taxes and corporations pay all taxes, what would we end up with? If you’re wealthy it’s good because you pay no taxes on your dividends or other interest income. If you’re poor there’s no change for you, except that the price of goods for basic needs would be higher than before because the corporations are passing their full tax burden on to you.
As anti-intuative as it seems, the more we tax businesses the more regressive our overall tax system becomes, because the less well off will share a disproportionally higher percentage of the tax burden relative to their income. An additional downside is that you end up with far less tax transparency, in that it is difficult to establish the true tax burden at the individual level.
As far as incentivization goes, I’d rather we to place incentives to perform on individuals rather than corporations, although I admit it’s just a gut feeling because I really need to think about this more. I like the idea of a flat or slightly progressive tax on individuals, with no tax shelters or incentives so economic decisions are made based upon actual need rather than tax considerations, which bring inefficiencies to the market, thereby reducing overall growth.
A progressive tax would provide breaks and incentives to companies that give workers higher wages and benefits. World-wide not just domestically.