This week the House Ways and Means Committee listened to Susan Ford, a senior executive with Corning Inc. complain that corporate taxes in America are too high, and negatively affecting the company. This is part of an ongoing hearing on “tax reform and the U.S. manufacturing sector.”
Corning Inc. earned $3 Billion dollars in the years of 2008-2010, and paid $0 in American Income tax. It also received a $4 million tax refund. Yet Susan Ford represented to the House that Corning paid an effective U.S. tax rate of 36 percent and a foreign tax rate of 17 percent.
In order to understand Ford’s claim, it is necessary to understand the difference between “Effective Tax rates” and “Statutory tax rates”. Effectively, Corning paid -.2%, less than zero, in taxes (according to CTJ’s analysis), so it is indecipherable how she came up with the 36% figure. This may involve a cumulative tax responsibility that Corning Inc. has yet to pay and is unlikely to pay due to the ever-proliferating loopholes, credits, and deductions in the tax code and the use of overseas tax havens.
Corning Inc. and 30 other businesses would have the House Ways and Means Committee believe that the United States has the highest Effective Tax rate among the industrialized world when in fact many huge corporations paid no net federal income tax from 2008 through 2010. In fact 26 of the 30 paid negative federal income tax rates. This equates to a net gain over the four years after taxes than before taxes!
Corporate taxes in the U.S., contrary to the constant protestations of conservatives, are at a 40 year low of 12.1%. Meantime real wages of the other 98% of us fell 2% in 2011, with employees working longer hours without raises, taking pay cuts, giving up benefits, and that’s if they weren’t laid off. Costs are on the rise, and the big corps are at the White House whining about tax rates and blaming that falsehood for keeping the bulk of their jobs overseas.
Can the tax structure be changed to lower the U.S. corporate income tax rate while simultaneously raising revenue to help reduce the federal deficit by closing loopholes and cracking down on tax havens? Probably, except for one problem. Republican representatives continuously block attempts to hold that discussion.
As American Billionaire Warren Buffet noted, “It is a myth” that U.S. corporate taxes are high… corporate taxes are not strangling American competitiveness.”
What’s being strangled is the middle class in America, eliminating the American dream as our wages go down and our tax liabilities remain the same. It is not a mystery that those with the most money are able to evade taxes, and get the ears of our representatives while the rest of us struggle to put food on the table and take care of our families.