The Rich Get Richer

The Institute for Policy Studies (IPS) –a left wing think tank– released a startling study on corporate taxes at the federal level. While we have some quibble points, their underlying facts are solid – and alarming. Much has been made of our sky high 35% corporate tax rate. Who pays these taxes? Apparently not the big guys.

Major corporate entities have the accounting and legal resources to find every loophole. They pour money into the pockets of the politicians and into lobbying; looking to avoid taxes. Many large companies put more into lobbyists and their CEO’s paycheck than they pay in taxes. Makes you wonder if CEO stands for Chief Evasion Officer. So if the big guys don’t pay taxes, who does? The little guys, they pay the corporate taxes. The hundreds of billions in corporate taxes pouring into the federal coffers comes mostly from small businesses. As famously put by billionaire Leona Helmsley: "We don't pay taxes. Only the little people pay taxes.”

We have known for years that major corporations create few of the jobs in America. Small businesses create jobs. So our high-end 35% tax on corporations falls on the shoulders of the very people who create the jobs we need to get our economy going again. Taxes, however, aren’t the only thing hindering small businesses from creating jobs. It’s hard to expand and hire if you don’t have the bucks for growth.

So who has the bucks? The banks, the same banks we bailed out with our tax dollars. Are they lending our money to the small businesses to create jobs? No, the banks are back in the business of trading complicated financial instruments –“Derivatives,” “Collateralized Debt Obligations” and such. Then laying bets on which ones will fail. This is the same nonsense that took us off the cliff.

How about the rich, the untouchables getting big tax breaks? Are they investing in small businesses, or maybe in the stock market? No, they’ve taken to trading commodities. Helping to drive up food prices and pushing up the price of oil while the world was awash in oil. That gave us high vacation time gas prices.

All the while consumer spending –the backbone of our economy– is struggling, except at the luxury level. Yachts, $1,495.00 shoes, private jets, $1.650.00 for a jar of facial “Crème,” jewelry, $200,000+ Mercedes, fancy resorts and spas, the rich have lots of bucks to pamper themselves.

All of this is perfectly legal. Most of it enabled by the stripping away of the laws and regulations put in place following the Great Depression. Legal, however, is not necessarily ethical. Therefore, it sometimes takes the hand of the people (read government) to restrain those who won’t do what’s right on their own. Otherwise they run amuck as they are now, pointing to spending on the poor, the old and the defenseless as the cause of the problem.