Americans’ interest in hiking corporate taxes wanes slightly

11 years ago

“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.]