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The Rich Are Different From You and Me – They Pay Fewer Taxes

The Rich Are Different From You and Me – They Pay Fewer Taxes

 

Written by Michael Winship and Bill Moyers

Benjamin Franklin, who used his many talents to become a wealthy man, famously said that the only things certain in life are death and taxes. But if you’re a corporate CEO in America today, even they can be put on the back burner – death held at bay by the best medical care money can buy and the latest in surgical and life extension techniques, taxes conveniently shunted aside courtesy of loopholes, overseas investment and governments that conveniently look the other way.

In a story headlined, “For Big Companies, Life Is Good,” The Wall Street Journal reports that big American companies have emerged from the deepest recession since World War II more profitable than ever: flush with cash, less burdened by debt and with a greater share of the country’s income. But, the paper notes, “Many of the 1.1 million jobs the big companies added since 2007 were outside the U.S. So, too, was much of the $1.2 trillion added to corporate treasuries.”

To add to this embarrassment of riches, the consumer group Citizens for Tax Justice reports that more than two dozen major corporations – including GE, Boeing, Mattel and Verizon – paid no federal taxes between 2008 and 2011. They got a corporate tax break that was broadly supported by Republicans and Democrats alike.

Corporate taxes today are at a 40-year low – even as the executive suites at big corporations have become throne rooms where the crown jewels wind up in the personal vault of the CEO.

Then look at this report in The New York Times: Last year, among the 100 best-paid CEOs, the median income was more than 14 million, compared with the average annual American salary of $45,230. Combined, this happy hundred executives pulled down more than two billion dollars.

What’s more, according to the Times “… these CEO’s might seem like pikers. Top hedge fund managers collectively earned $14.4 billion last year.” No wonder some of them are fighting to kill a provision in the recent Dodd-Frank reform law that would require disclosing the ratio of CEO pay to the median pay of their employees. One never wishes to upset the help, you know. It can lead to unrest.

That’s Wall Street – the metaphorical bestiary of the financial universe. But there’s nothing metaphorical about the earnings of hedge fund tigers, private equity lions and the top dogs at those big banks that were bailed out by tax dollars after they helped chase our economy off a cliff.

So, what do these big moneyed nabobs have to complain about? Why are they whining about reform? And why are they funneling cash to super PACs aimed at bringing down Barack Obama, who many of them supported four years ago?

Because, writes Alec MacGillis in The New Republic – the president wants to raise their taxes. That’s right – while ordinary Americans are taxed at a top rate of 35 percent on their income, Congress allows hedge fund and private equity tycoons to pay only 15 percent of their compensation. The president wants them to pay more; still at a rate below what you might pay, and for that he’s being accused of – hold onto your combat helmets – “class warfare.” One Wall Street Midas, once an Obama fan, now his foe, told MacGillis that by making the rich a primary target, Obama is “[expletive deleted] on people who are successful.”

And can you believe this? Two years ago, when President Obama first tried to close that gaping loophole in our tax code, Stephen Schwarzman, who runs the Blackstone Group, the world’s largest private equity fund, compared the president’s action to Hitler’s invasion of Poland.

That’s the same Schwarzman whose agents in 2006 launched a predatory raid on a travel company in Colorado. His fund bought it, laid off 841 employees and recouped its entire investment in just seven months – one of the quickest returns on capital ever for such a deal.

To celebrate his 60th birthday Mr. Schwarzman rented the Park Avenue Armory here in New York at a cost of $3 million, including a gospel choir led by Patti LaBelle that serenaded him with “He’s Got the Whole World in His Hands.” Does he ever – his net worth is estimated at nearly $5 billion. Last year alone, Schwarzman took home over $213 million in pay and dividends, a third more than 2010. Now he’s fundraising for Mitt Romney, who, like him, made his bundle on leveraged buyouts that left many American workers up the creek.

To add insult to injury, average taxpayers even help subsidize the private jet travel of the rich. On the Times’ DealBook blog, mergers and acquisitions expert Steven Davidoff writes, “If an outside security consultant determines that executives need a private jet and other services for their safety, the Internal Revenue Service cuts corporate chieftains a break. In such cases, the chief executive will pay a reduced tax bill or sometimes no tax at all.”

Are the CEOs really in danger? No, says Davidoff, “It’s a common corporate tax trick.”

Talk about your friendly skies. No wonder the people with money and influence don’t feel connected to the rest of the population. It’s as if they live in a foreign country at the top of the world, like their own private Switzerland, at heights so rarified they can’t imagine life down below.

This post was originally published by Truthout.

 

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76 comments

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10:15PM PDT on Apr 18, 2012

This country desperately needs a simplified tax code that eliminates loopholes and subsidies. I'd like to see a flat tax personally. I'd also like to see the U.S. implement a 'war tax' that places the burden for funding wars on the upper class. Hopefully such an approach would cause our leaders to become more circumspect in entering into the world's conflicts and more responsible in getting the rest of our allies to foot a greater share of the associated costs.

12:27PM PDT on Apr 18, 2012

... i've always paid my heavy taxes in full... all my debts in full... always on time...
never resorted to declaring bankruptcy, and never faced foreclosure on my home mortgage...
and got little to near nothing back relative to what i've contributed into the 'system'
:(

12:09PM PDT on Apr 17, 2012

Lower their taxes and the job creators will create more jobs? Really? How did those Bush tax cut thingees work out for us workers? Ummm not so good huh. Where's the jobs Boehner? Oh the Bush administration lost millions of jobs, ummmm. The Fat Cats thought he meant to sit on the money till they had a trillion, and create the jobs some day.

7:45AM PDT on Apr 17, 2012

The truth of the matter is that corporations do effectively rule the World anyway, regardless of what any government might think. I believe I saw somewhere once that GM's budget was somewhere in the top ten of the World's largest. Well, whatever/wherever it was/is, it still represents a massive amount of clout.
These CEO's are not elected by us but their companies have as much, if not more, effect upon our lives as our local or national governments.

7:19AM PDT on Apr 17, 2012

Tax breaks and funding of the, so called, “job creators,” cannot work in a “global economy,” if it ever did before. The very jobs being created are those being sent overseas. Innovation, the creation of new business, won’t stop the artificial removal of jobs from this country and therefore cannot create new jobs, other than for the business owners themselves. Education will not help either. The price differential for engineers and computer programers is equally disparate and those jobs are already being sent to other countries.

Corporations have over-powered our government which now believes that out-sourcing and off-shoring of U.S. jobs is inevitable and necessary with expectations that the middle class should fall on their swords. It is the underlying cause of the financial collapse and borders on national security with the loss of our middle class tax base. Yet, this nation does nothing, not even demand it be restricted or disincentivized by whatever method. International businesses are doing the UN-AMERICAN activity of destroying U.S. salaries, U.S. businesses that hire in the U.S., and as an end result, destroying the U.S. marketplace while still demanding BUSINESS ENTITLEMENTS and protections for themselves.

Infrastructure spending and tax breaks will not replace enough jobs to keep up with the hemorrhaging loss of U.S. jobs from out-sourcing over seas. Neither party will do anything about it unless we begin grass roots efforts

5:35AM PDT on Apr 17, 2012

Yes, a World Revolution for the good of and probably the continuance of Mankind.
As the man said, 'Power corrupts and absolute power corrupts absolutely!' For power read money, pretty much the same thing, sadly.
Certain hubristic shits amongst the Human Race seem to think that they should rule over the rest of us and further that they deserve special treatment; that ALL the World's riches should be heaped at their feet to the exclusion of everybody else. We, the Proletariat, are merely there to produce the wealth for these greedy turds and otherwise for their amusement.
Wow! Remember the French and Russian Revolutions: ordinary people will take so much but then the string snaps.
I really think a few hats need to be raised, along with the heads inside them, to make these arrogant and amoral people, with shit for brains, realise THAT THEY ARE NOT SPECIAL! That what they do DOES NOT JUSTIFY SUCH REWARDS.
The logic of this latter statement can easily be shown by having Job Descriptions for the avaricious CEO's of large corporations; get them to detail what they do on an hour by hour basis to justify the thousands of £'s an hour they are paid, we shall see then how and why these chaps are so pivotal and are such geniuses.
No, I still think separating a few heads is still the best!

4:06AM PDT on Apr 17, 2012

We need a World Revolution.

11:06PM PDT on Apr 16, 2012

simply this makes me sick...

9:45PM PDT on Apr 16, 2012

I'll take this nonsense a little more seriously when the 48% of workers who now pay no federal income tax have to pay their fair share.

7:46PM PDT on Apr 16, 2012

How do you pay "fewer" taxes?

I think you can pay "less" tax, but never heard of "fewer" taxes.

And this article fails to mention how 15% of a million is a hell of a lot more ACTUAL MONEY than 35% of $45,000!

And where does that 35% come from? I earn $40,000 a year and I've NEVER paid close to 35%! My brother-in-law earns $90,000 a year and he's NEVER paid close to 35%!

This website: http://www.moneychimp.com/features/tax_brackets.htm points out that 35% kicks in at $379,150, but the overall tax rate of someone earning that much is more like 22%.

And it doesn't say anything about corporate executives paying less than 35% on earnings above $379,150.

So what's the real truth huh?

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