Campaign for America's Future, 10/21/08
Last week, I appeared on Fox News to discuss Barack Obama's tax proposals. You can watch the clip here - and make sure to watch the end where Fox News tries to drown me out with music:
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Not surprisingly, the "debate" centered around the false premise that Obama's tax cuts are actually welfare. I say that's false because - as I pointed out on the show - everyone pays some form of taxes, whether it's income, property, sales or payroll taxes. When you take all those taxes together, most working- and middle-class Americans pay a higher effective tax rate than the Warren Buffetts of the world (as Warren Buffett, by the way, readily acknowledges). So Obama's plan to pass refundable income tax credits is only a handout if you look exclusively at one slice of taxes - in this case, income taxes. But in the overall tax scheme, those tax credits are aimed at better equalizing the tax structure so as to diminish the gap between Warren Buffett's very low effective tax rate and Joe Sixpack's high effective tax rate. Only in the asylums of Fox News and Republican Party politics is reducing that effective tax rate gap billed as "welfare."
This concept of effective tax rates (ie. the tax rate actually paid and enforced) is key to understanding the most telling part of this Fox News discussion - the part at the end where former Bush-Cheney spokeswoman Jennifer Millerwise Dyck parrots McCain campaign talking points about America supposedly having a very high corporate tax rate in relation to the rest of the world. This, says Dyck and fellow Republicans, is driving businesses to move offshore.
It sounds like a credible storyline, especially considering that officially, our corporate tax rate is somewhere between 35 and 39 percent. But, as always, the devil is in the details.
To know how high - or low - the effective tax rate is, you have to go beneath the top-line rate and account for all the loopholes, subsidies and write-offs - and the way to do that is by looking at corporate tax revenues as a percentage of a country's GDP. That way, you know how much corporations are actually paying as a share of your overall economy - in other words, you know the real corporate tax rate, not the fake one advertised by top-line numbers. And when you look at America's tax structure through this lens, you see that even the Bush Treasury Department admits we have the second lowest effective corporate tax rate in the industrialized world. Check out page 42 of this report to see what I'm talking about:
Indeed, this explains the dissonance between Republican claims of "highest corporate income tax rate in the world" and the recent Government Accountability report showing that most corporations pay no corporate income taxes at all. The latter is the truth - most corporations don't pay any taxes because of loopholes, write-offs and subsidies that allow them to effectively reduce that 35 percent corporate tax rate to zero. In fact, many profitable corporations actually collect tax rebates. But as I told Fox News, we don't hear criticism of that kind of "corporate welfare" from the Republican mouthpieces deriding Obama's middle-class tax cuts as welfare.
As you can see from the video clip, when the GOP parrot I'm debating throws out the standard "high corporate tax" canard, I revert to the actual facts over and over and over again, to the point where Fox News feels the need to drown me out with music at the end. And I was, of course, rewarded with the usual river of hate email from Fox News viewers, most of which reaffirmed the dittohead nature of the modern conservative audience in that almost every email included exactly two links purportedly "proving" the GOP talking point - one a link to U.S. News and World Report's right-wing business columnist, the other to the fringe Tax Foundation, a group funded by Scaife, Koch and the usual constellation of Wingnuttia's trust-fund babies. You'll notice that both of these sources focus only on the official tax rate, not the effective tax rate - deliberately misleading their readers about the facts.
The good news is that polling shows most Americans do not think the big problem facing our country is that wealthy corporations are oppressed by high taxes. That is, most Americans live in the "reality-based" world and understand that if anyone is winning big from the Bush-McCain tax policies, it is Corporate America and the super-rich. So if the GOP wants to attack Obama for trying to cut 95 percent of America's taxes - if they want to lash their electoral hopes to a promise to give Big Business another tax handout - then I say that's great. They are helping progressives build a landslide and an election mandate.
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