Saturday, January 30, 2010

How About a Corporate Gains Tax?

During his State of the Union speech on Tuesday, the President called for reducing the capital gains tax on small businesses to the delight of many Republicans in the audience who recognize that this is a baby step toward eliminating the capital gains tax on big business, too.

And, in light of last month's landmark Supreme Court decision granting First Amendment rights to corporations, why not also impose the kind of tax burden on corporations those earning $250,000 a year or more currently face.

Given the gargantuan, egregious profits of Goldman Sachs, AIG, and banks, why not inaugurate a similar program to the one in the UK here, and introduce a corporate gains tax? The U.K has been taxing corporate profits since about 1965, and given the President's announcement that reducing the deficit is as important as job creation, taxing corporate gains might be a way to accomplish both--reduce the deficit, and have capital to give the states for job expansion.

There is, of course, already a corporate income tax on the federal and state level that is somewhere between 15 - 39% on the federal level. Income tax does not take into account what part of that income is not used to cover expenses, or profit. Should the United States choose to tax profits, too, at the rate of 25% which is less than the U.K., but more than what is in place now, deficit-reduction might be well on its way.

One has only to look at the mind boggling bonuses financial institutions in this country have given to their chief executives to see that, while it's not perfect, the math is certainly better than a miniscule tax to recover some TARP money. Bonuses Goldman Sachs, Bank of America, and others have paid their executives pale in comparison to the record profits oil companies have made since the U.S. invaded Iraq.

Reportedly, in 2002, worldwide profits of the five largest oil companies were $35 billion. But, in 2008 alone, Exxon Mobil posted the biggest annual profit in American history---$45 billion. The most profitable year for an oil company in Iraq produced $95 billion in revenue, according to Global Policy Forum and, over time, some estimates for oil profits in Iraq range anywhere from $600 billion to $9 trillion. A corporate gains tax of 15% on oil companies alone could make a substantial dent in the $1.4 trillion deficit.

But, the oil companies are a good place to start. Let's not end there. The idea is to reset the tax structure, not temporarily but permanently, so that the highest taxation falls upon the biggest shoulders, those of the major corporations, and the wealthiest Americans.

All this means is that now that the highest court in the land has decided to blur constitutional distinctions between personhood and banksterhood, why not extend that to the realm of taxation by holding corporations accountable for their profiteering in the same way we hold individuals responsible for the acquisition of assets?

And, what is recovered from the revenue generated by a corporate gains tax can go to subsidize affordable housing, end hunger, expand Medicaid and Medicare, and guarantee each and every American a living wage