An Open Letter to CBS' 60 Minutes Following Its Pitch for More Corporate Handouts
Your report on the corporate tax rate and new tax havens March 27 (“A look at the world’s new corporate tax havens”) was a stunning disservice to all the Americans who are harmed by a national budget that is seriously distorted by the failure of so many U.S. corporations to pay their fair share.
Under the veneer of exploring tax havens, the segment comes across as a justification for those corporations that fail to pay taxes, while giving a sympathetic voice to corporate CEOs who think they should be paying even less.
By uncritically promoting the Wall Street talking points that the supposedly onerous U.S. tax rate gives well-meaning CEOs no choice but to avoid paying taxes, your one-sided piece steers U.S. policy in a direction that would only make the economic crisis in this nation, and the imbalance between the haves and have-nots in our society, far worse.
There is so much wrong with this piece, it’s almost hard to know where to begin, so we’ll focus on just a few points:
1. You misled viewers about the reality of what corporations pay and mostly do not pay in the U.S.
While there are a few token references to the small percentage some corporations pay in the U.S., the overall impression left with the story is of an “onerous” 35 percent rate that forces corporations to create tax havens.
But the 35 percent figure, which you harp on in the story, as did various Tea Party candidates in the last election, is a complete mirage. As a 2008 GAO report http://bit.ly/IJTJX illustrated, 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.
Many recent reports, easily accessible to your research staff, would have found a long list of giant corporations that pay no taxes, and often get millions or even billions in tax rebates. Among them such well known names as Exxon Mobil, Bank of America, Wells Fargo, Citgroup, Boeing, General Electric, Valero Energy, ConocoPhillips, and Chevron.
Some 30 years ago, coinciding with the administration of Ronald Reagan, corporations and individuals contributed about equally to the U.S. treasury; now individuals account for some five times as much, a direct result of deliberate policies which permit big corporations to avoid paying taxes.
Because of the numerous tax loopholes, there is no real tax rate in the U.S. To let the right-wing economists and a corporate CEO whine that they are burdened by a 35 percent rate that no one pays, without dissenting voices, is to thoroughly distort reality.
2. Corporations are not creating jobs or investing in America because of the onerous 35 percent tax rate.
This is probably an even greater fiction that your show deliberately promoted without a single counter-voice.
First, the supposed high tax rate is hardly damping down profits. Corporate profits in the third quarter of 2010 were $1.6 trillion – the highest on record. Yet the past two years have also witnessed the highest unemployment in decades, officially at least 8.9 percent now, with the real figure probably double that.
Therefore, it is dishonest to report that the tax rate is preventing these companies from creating jobs in the U.S. or reinvesting in America. They have more than enough money to do that, if they wished. Which brings up the point that it is a false argument that Stahl and the Wall Street representatives make that these companies would invest in job creation if they only had a lower tax rate.
That argument was further debunked by, among others, Austan Goolsbee, President Obama’s Chairman of the Council of Economic Advisers, in a 1997 paper, in which he wrote:
“Although there appears to be an abiding faith among policy makers that tax incentives can influence the investment decisions of firms and serve as a tool for stabilizing the economy, empirical evidence for the connection is weak. Econometric research has commonly found that tax policy and the cost of capital have little effect on real investment.”
Even your own report suggested a one-time tax holiday did not spur growth, and it would not this time either. Reducing the tax rate, even to zero, would undoubtedly further expand corporate profits, enabling the super-rich CEOs to engage in even more of the specious financial speculation that was a major source of our present economic crisis, and as an ancillary perk to buy more private planes, yachts and vacation homes. But there is no evidence it would create jobs or spur investment.
3. Promoting Ireland as a sound economic model makes one wonder if you get the news in your control room.
The Celtic tiger is no more: defanged; as much a myth as the U.S. 35 percent corporate tax rate. The idea that U.S. corporations are turning Ireland into a job engine is almost laughable these days.
Here’s the lead on a Business Week article dated March 24, three days before your segment aired:
“Ireland’s economy shrank the most in a year in the fourth quarter of 2010 as rising unemployment curtailed consumer spending and investment and exports declined….The Fine Gael-led government, which came to power after an election last month, wants to revive the economy after a slump that sent the budget deficit soaring and brought the banking system close to collapse.”
4. Finally, a more honest report would have provided balance by offering alternative visions to fixing our long-term budget woes.
Beginning by cracking down on the corporate tax evaders with real penalties on any companies that do business in the U.S. and fail to pay taxes. That would be a far more humane solution than the draconian budget cuts now being discussed in Congress, and far more real than pretending you will encourage corporations to invest in America by further lowering their “official” tax rate.