Sunday, April 17, 2011


It's tax time again.

No one likes paying taxes; everyone feels done to. The news of people who pay no taxes sells a lot of newspapers.

What is really going on?

General Electric paid no taxes for 2010. Instead they got a tax credit. Some other corporations managed to pay a very small percentage of their profits in taxes.

How do they do it? Can I get the same low tax rate? Multinational corporations pay taxes on their foreign profits only when they are brought back to the United States. Often taxes are reduced by the amount of tax paid to foreign governments. Clever accountants can make it appear that profit made abroad is much less than it actually was.

In addition, our tax code is full of special tax exemptions, reductions that profit taxpayers at all levels – for instance deductions mortgage interest on your house or for charitable donations – but all are particularly beneficial for large corporate entities who areften the original sponsors of those deductions.

So, yes, some very large international corporations do not pay their fair share of national expenditures.

These exemption are all the more aggravating because a significant portion of our national budget goes to pay for the military. The armed forces maintain bases in almost all countries around the globe and one of their main tasks is to keep the world safe for multinational corporations to make greater profits. The US government takes good care of these corporations. It would only be decent, on their part, to pay their fair share of those services.

Pundits from all parts of the political spectrum are busily debating whether taxes on individuals are fair or not. Rush Limbaugh, and folks like him, bemoan the fact that the richest taxpayers provide the bulk of the nation's income. They are not moved by the reply that the people who have the most money, of course, pay the most in taxes.

More middle of the road observers of the tax system point out that the very wealthy pay at a lower rate than most working people. The tax code taxes investment income at a much lower rate than income that someone worked for. If you inherit several million dollars and never do a lick of work in your life, your tax rate is 15%. If you work for a living, you are liable to pay taxes at 25% -- unless you get paid so badly for your work that you live in poverty.

It appears that our tax code is designed to punish us for working rewarding idleness instead.

Others are complaining that the tax code is so complicated that only people with enough money to pay expensive accountants and tax lawyers are in a position to reduce their taxes.

In addition, the tax code contains very specialized and focused tax reductions, such as for maintaining a railroad track. That allows people who own railroads to reduce their taxes. There are tax reductions for owners of plug-in electrical vehicles, which, until recently, included golf carts.

And so it goes. The rich have not only more money but much more political power. (And Rush Limbaugh!) The taxes paid by the very rich, compared to the taxes paid by us reminds us of the old interpretation of the Golden Rule: “Those who have the gold, make the rules.”

Happy Tax Day!