The Young Turks

 It's deja vu all over again...and was tried once before in 2004 under the auspices of the American Job Creation Act of 2004.

In 2004 McCain,  called it the "worst example of the influence of the special interests I have ever seen."

< McCain contemplating tax policy...and his fiber intake.

Now, firmly in the pocket of mainstream Republicanism, ex-maverick McCain and the old guard have set their sights set once again on our " abusive" corporate income tax code. You know, the oppressive corporate tax that 66% of US and foreign corporations operating in the US do not pay now or have not paid in the past according to a report released this month from the GAO that analyzed tax records from 1998-2005.

SPIN: McCain demands a cut in the Corporate Tax Rate From 35 To 25 Percent. "A lower corporate tax rate is essential to U.S. competitiveness. America was once a low-tax business environment, but as our trade partners lowered their rates, America failed to keep pace, leaving us with the second-highest rate among the world’s advanced economies."

FACT: GAO:Two-thirds of U.S. corporations  paid no federal income taxes between 1998 and 2005, according to a new report from Congress.( while exporting jobs at a record rate)

FACT: More than 38,000 foreign corporations doing bussiness in the US had no tax liability in 2005.

FACT: 1.2 million U.S. companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales.

FACT: 25 percent of the U.S. corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.n( while exporting jobs at a record rate)

Even the corporations that do pay rarely if ever, pay the 35% tax rate. most pay an effective rate between 15-20% US companies paid an average of $11.88 in corporate taxes for every $1,000 in gross receipts.

It gets better:

FACT Over 1.6 million businesses owed over $58 billion in unpaid federal payroll taxes, including interest and penalties. Some of these businesses took advantage of the existing tax enforcement and administration system to avoid fulfilling or paying federal tax obligations—thus abusing the federal tax system. Over a quarter of payroll taxes are owed by businesses with more than 3 years (12 tax quarters) of unpaid payroll taxes.

Why is that? Like all things tainted by Republicanism the IRS's overall approach under the Bush administration is that "collection focuses primarily on gaining voluntary compliance"—even for egregious payroll tax offenders—a practice that can result in minimal or no actual collections" for these offenders.

In other words we can

• Rigorously enforce stem cell research bans,
• Aggressively protect frozen embryo's,
• Demand abstinence only in the schools
  
• Fret endlessly over Janet Jacksons breasts.
• Set the Justice Department #1 prosecutorial priority as "pornography" (in the age of Terrorism).
• Cut Veterans programs.
• Suppress scientific evidence about global warming.
• Save Terry Schivo
  
• And, in a cynical nod to"fiscal responsibility",insist on a 10% reduction in Medicare and Medicaid reimbursements at the detriment to the elderly and the sick.
  

The whole Corporate tax rate argument rings hollow. Why? As noted above ,because they tried it before.

In 2004 the Republican controlled Congress passed the conservative solution essential to U.S. competitiveness the American Job Creation Act of 2004. The law was purported to create American jobs by providing huge tax incentives to companies  in the USA.

At the time McCain called it: "worst example of the influence of the special interests I have ever seen."

In fact the act provided 250 billion in tax breaks to whole multitude of  Republican insiders. It purportedly gave tax deductions to American manufacturers, and offered a one-time tax holiday in 2005 when corporations could "repatriate" their foreign income at a bargain tax rate.

This repatriation according, to the Republicans would"encourage R & D and capital investment in the United States", leading to new American jobs.

Sound familiar? So how did it work?

"IBM, for example, is banking a $2.8 billion refund—well, better to call it a "tax savings"—because instead of paying the normal corporate tax rate  on $9.5 billion in profits it earned overseas, the company paid only 5.25 percent. "

So what does IBM do? Create American jobs with their repatriation? No, within days after repatriating billions of dollars in foreign profit IBM implemented a program called LEAN. From a leaked IBM email:

"LEAN is about offshoring and outsourcing at a rate never seen before at IBM. For two years Big Blue has been ramping up its operations in India and China with what shareholders have been told is the ultimate goal of laying off at least one American worker for every overseas hire. The plan is to continue until at least half of Global Services, or about 150,000 workers, have been cut from the U.S. division."

Examples of what other big companies did:

"Some companies taking advantage of the generous tax break haven't even tried to hide their layoffs. In January 2005, on the same day National Semiconductor said that it was repatriating $500 million under the American Jobs Creation Act,it announced it was cutting 6 percent of its workforce, Colgate-Palmolive, which in December 2004 announced plans to cut more than 4,000 jobs, brought back $800 million in overseas profits last year. "

One item in the bill...oddly, was a provision to allow the deduction of sales taxes..but only if your state did'nt have a state income tax.

"The big winners will be higher-income people in states that have a sales tax but no income tax: Florida, Nevada, South Dakota, Tennessee, Washington and Wyoming. Tennessee taxes only dividend and interest income. Alaska and New Hampshire have no income or statewide sales tax, but Alaska has local sales taxes.

Except for Washington, all those states went for Bush/Cheney in 2000. Florida, Nevada, New Hampshire, Tennessee and Washington are considered swing states in the  2004 upcoming election"

So Republicans can puff up and crow about  "huge tax incentives" to create jobs... it doesn't matter.Its about patronage and rewarding supporters to the detriment of all.

Lesson learned: be very, very, suspicious of claims by Republicans / conservatives of tax reduction plans  " that create American jobs."

It's fiduciary version of  "will you respect me in the morning" question. The answer is a resounding NO.  Ask the former IBM employees.

Occasionally, as in this case ,McCain claims to toss some peanuts to the common folks to try and influence an election but the real target of this largess are the RNC contributors and the status quo. McCains plans are simply designed to reward Republicans and their contributors; the super-wealthy and their special interest buddies.

We are told that companies are not people, people in turn own companies. In theory that may be true but companies are actually controlled by CEOs and board members.

Without fundamental reforms on corporate board members and CEO pay , how corporations declare and pay dividends , regulations on stock buy backs and reforms on permissible write offs and deductions, corporate tax cuts are another trillion dollar give away.

The argument that the Treasury will see more revenue with from increased stock values, stock sales, and from dividends from the shareholders is phony as well with out similar reforms in capitol gains and dividend tax rates.

To Republicans, freedom is only worthwhile when someone else is paying for it.

Sources Slate ,WaPo