The Great Corporate Tax Shift
For more than three decades, what might be called the Great American Tax Shift has been gaining momentum. Wealthy investor households with annual incomes of more than $5 million and $20 million respectively have been paying less and less in taxes relative to the accelerating growth of their incomes, while the more than 100 million wage earning U.S. households have been shouldering an ever-growing tax burden at the federal, state, and local levels.
From Table 1 it is apparent that there is both a long-run decline in the share of total federal revenue derived from the Corporate Income Tax, as well as a shorter-run trend of a precipitous fall, 2009-2012, in corporate tax revenues occurring during the so-called recovery period from the 2007-09 recession. Moreover, the average annual corporate tax rate of 8.2 percent during the last four years, 2009-2012, has been taking place as corporate profits have risen to historic record levels. Profits today, in 2013, exceed even the record levels attained in 2007 at the peak of the housing-finance bubble before the 2008 crash.
Table 2 shows, corporate profits more than doubled during the first seven years of the George W. Bush regime. Those profits took a hit during the recession of 2008-09, but recovered rapidly—exceeding the previous highs of 2007 by 2010, only a year after the end of the recession in 2009. But despite the rapid recovery of profits, corporate tax revenues as a share of total revenues remained near recession lows. Ordinarily, corporate tax revenues should rise as corporate profits accelerate. But this has not happened since 2009. The decline in U.S. corporate tax revenues has occurred in spite of the record surge in corporate profits since 2009. The result was an even more dramatic surge in corporate after-tax profits in the U.S. since 2009—accelerating at a rate during the Obama administration as rapidly as under the George W. Bush administration. The recession of 2008-09 was thus a mere blip on the accelerating upward climb of corporate profits in the U.S.
The Corporate Profits graph illustrates that record surge in after-tax corporate profits since the late 1980s. That surge is the result of a major decline in the effective (i.e. actual taxes paid) corporate tax rate since the 1980s, in contrast to the official corporate tax rate of 35 percent that hasn’t changed much in more than two decades.
Table 3 shows that the accelerating growth of corporate after-tax profits has mostly occurred since 1986—when the last major tax code overhaul occurred—especially since the 1990s.
At about one-third the official tax rate for the past four years, the sharp decline in the effective corporate tax rate is the result of numerous changes in the corporate tax rates since the mid-1980s. A short list of these include:
Changes in 1995-96 that allowed multinational corporations to pay almost no taxes to the U.S., by moving offshore profits around among company subsidiaries and to different countries with lower taxes
The acceleration of depreciation write offs for new equipment that expanded greatly after 2001 and again after 2008:
· Changes that allowed select industries and companies to tax profits as personal income at the capital gains rate or as carried interest
· Changes that allowed widespread deferred tax agreements (DTAs) and averaging of corporate taxes up to five years to reclaim back taxes paid or future taxes to be paid
· Rules permitting corporations to deduct interest payments
· Rules allowing companies to become real estate trusts and pay no taxes
· Scores of industry-specific rules resulting in special tax exemptions and credits
In addition to the record low 12 percent paid by corporations to the U.S. federal government today, only 4.2 percent more is paid in state-local corporate taxes and foreign government taxes combined. That’s a total for all taxes paid globally by corporations of only about 16 percent.
What the 4.2 percent means is that U.S. corporations are getting an even more generous break from U.S. states, whose corporate income tax rates range from 5-10 percent. But corporations are only paying around 2 percent effectively. Ditto for the corporate foreign tax payment scenario. Official rates for corporate income taxes levied by other advanced economies range from 15 percent (Canada) at the low end and 34 percent (France) at the high end. But U.S. multinational corporations are paying, in fact, only around another 2-3 percent on average.
That means that not only have corporate income tax effective rates and tax payments been in a long-run decline, but lately, in a short run freefall. Yet another way of assessing the declining corporate income tax is to look at the share of corporate taxes as a percent of U.S. corporate profits. In the 1960s, corporate taxes as a share of corporate profits averaged around 40 percent, ranging from 25 to 50 percent. In 1987, for example, Microsoft Corporation paid taxes equivalent to 33 percent of its profits that year; in 2010 it paid only 10 percent. Between 1987-2007 corporations paid, on average, taxes equivalent to 25.6 percent of their profits; since 2008, less than half that, on average.
Corporate taxes paid as a share of Gross domestic Product in the U.S. have fallen by half since the late 1970s. So, too, have corporate taxes as a share of national income, even as corporate profits as a share of national income have doubled—from 7 percent in 1980 to 14 percent today.
The decline in the Corporate Income Tax has meant not only a major increase in corporate after-tax income, but also a shift in more income from the corporation to its wealthy individual investors (sometimes referred to as high and very high net worth individuals or HNWIs), as rising after-tax corporate income is passed through in greater volumes to corporations stockholders, corporate bond buyers, and its CEOs and senior managers. Conversely, as the Corporate Income Tax has declined, other taxes—in particular payroll taxes at the federal level and forms of sales taxes and other regressive taxes at the state and local levels—have been raised to make up the difference in the loss of government corporate tax revenues.
The decline in the Corporate Income Tax has, in turn, contributed significantly to the contemporary trend of increasing income inequality in the U.S. As the decline in the corporate tax has resulted in more profits for corporate America—and, in turn, for more capital gains, dividends, and capital incomes for the wealthy—it has led to a corresponding rise in the total tax burden on middle and working class households and therefore a decline in their disposable income.
Parallel to the decline in the Corporate Income Tax, and the corresponding rise in Corporate Income, has been the redirection of that rising income into global financial markets speculation, offshore emerging market investments, dozens of country-friendly tax shelters, corporate subsidiaries abroad where revenue is diverted in order to avoid paying U.S. taxes, and into record U.S. stock buybacks and dividend payouts to shareholders. The remainder of corporate income that is not redirected, sheltered, avoided, or diverted, is retained on corporate balance sheets as hoarded cash.
The $10 Trillion U.S. Corporate Cash Hoard
For example, more than $2 trillion today has been diverted by U.S. multinational corporations to their offshore subsidiaries to avoid paying the U.S. Corporate Income Tax, according to various business press reports.
In addition to the $2 trillion now diverted by U.S. multinational corporations offshore, after having paid federal taxes, another $1 trillion is now held as cash on hand by the 1,000 largest nonfinancial companies based in the U.S. as of mid-2013, an increase of 61 percent in the past 5 years, according to a study by the REL Consulting Group. For financial companies, deposits in U.S. banks are currently at a record $10.6 trillion, while bank loans outstanding have been declining since 2008 and are now at a record low of $7.58 trillion—thus leaving U.S. banks sitting on a cash hoard of nearly $3 trillion according to the Wall Street Journal. These record levels after taxes exist despite corporate buybacks of stock since 2009 having passed the $1 trillion mark in 2012, according to a survey by Rosenblatt Securities—with projections to increase at an even faster rate of $400-$500 billion more in 2013; and despite corporate dividend payouts of $282 billion in 2012, projected to exceed $300 billion in 2013.
That’s approximately $8.5 trillion in buybacks, payouts, and hoarded cash by U.S. corporations since 2009 during the sub-par economic recovery of the past four years—i.e. buybacks and payouts made possible in large part by declining corporate taxation. That’s corporate income and cash that has been diverted, hoarded, or otherwise not committed to U.S. real investment and therefore not contributing to jobs, income creation and consumption in the U.S.
That $8.5 trillion corporate total, moreover, doesn’t reflect additional dollars that have been spent by U.S. corporations abroad. Total U.S. corporate foreign direct investment is estimated at $4.4 trillion as of 2012, up from $3 trillion in 2007 and from $1.3 trillion in 2000. That’s another roughly $1.4 trillion in corporate income committed offshore since the end of the recession in 2009.
This nearly $10 trillion in corporate income diverted offshore, distributed in buybacks and dividends, and otherwise still hoarded as cash does not include individual wealthy investors’ additional trillions of dollars they have also diverted and redirected into offshore tax shelters—from the Cayman Islands to Switzerland to Vanuatu in the pacific to avoid taxation—i.e. into what the IRS refers to as 27 global jurisdictions. Some estimates of this individual income tax sheltering, avoidance and fraud run as high as $11 trillion globally—of which U.S. wealthy individual investors account for at least a third or more, about $4 trillion. Nor does the estimated $10 trillion corporate income include the scores of ways by which wealthy U.S. households and investors are allowed to avoid, or, by fraudulent means, otherwise reduce their tax obligations within the U.S. But all that’s a matter of the Personal Income Tax—not the Corporate Income Tax—and therefore a separate trend within the general Great American Tax Shift.
Corporate State Income Tax Race to the Bottom
Behind the decline in the corporate income tax as a share of total tax revenues lies the growing proliferation of corporate tax exemptions, credits, deferral of payments, and various other loopholes. This is the explanation of why the effective corporate tax rate has consistently declined while the official rate has not. This trend of declining effective rate is occurring at the state level as well as the U.S. federal level. As previously noted, while the official state corporate tax rates range from 5 to 10 percent, states, in aggregate, are averaging only about 2 percent effectively in corporate tax payments. Part of the reason for this is states across the U.S. have been in a race to the bottom to grant more and more corporate tax loopholes and exceptions in order to lure corporations from other states to their state.
A recent New York Times survey showed that states are not only lowering their corporate tax rate to lure corporate headquarters and operations, but are granting corporations cash, free use of public buildings, exemption from property taxes, and diverse other awards in a desperate attempt to bring jobs to their states from other states. The New York Times article estimated the cost in state corporate tax revenues at around $80 billion a year. In many cases, corporations take advantage of the awards and then create few jobs or cease operations afterward.
The $80 billion a year average since 2009 amounts to more than $300 billion in reduced state corporate tax revenues. That has occurred despite a cumulative budget deficit total among all 50 states of $581 billion between 2008-2012. In a sense then, more than half of the state budget deficits during the past four years may be attributable to corporate tax breaks. But instead of targeting a restoration of corporate taxation, most of the states have targeted reducing public workers’ pensions, benefits, and wages as the solution to their budget deficits.Among the most egregious states lowering corporate tax revenues is Texas, which provides $18 billion a year in such concessions. Oklahoma and West Virginia have granted corporate tax concessions equivalent to one-third of their annual state budgets.
The industries and corporations that are the main beneficiaries of this race to the bottom trend in state corporate taxation are oil and gas companies, film and entertainment, technology companies, and auto companies—the latter of which pioneered the trend back in the 1980s. Since 1985, auto companies have received $13.9 billion in state corporate income tax concessions—even as 267 auto plants have been shut down in the U.S.
The trend toward declining state income taxation continues to accelerate. A number of states have, and are proposing to, eliminate corporate income taxation altogether. Most recently, Louisiana, Kansas, and Nebraska. The inter-state U.S. corporate income tax race to the bottom continues.
Multinational Corporations Offshore Tax Games
Multinational Corporations have been engaging in a public relations full court press for the past two years, attempting to convince the public and politicians that the U.S. corporate income tax is the highest in the world. They repeatedly point to lower official corporate tax rates throughout the advanced economies. It is true, most official corporate tax rates in Europe, Japan and elsewhere are lower than the U.S. 35 percent official rate.
But their corporate tax loopholes are nowhere near as generous as in the U.S. In addition, the state or provincial jurisdictions within many of these countries have higher official and effective corporate tax rates as well as corporations pay more at the state-province-district levels than the average effective rate of around 2 percent in the U.S.
The most telling rebuttal is that U.S. corporations have been paying almost no taxes on corporate profits earned offshore—while they have simultaneously been redirecting U.S.-earned corporate profits to their offshore subsidiaries to avoid paying U.S. taxes. This game is made possible by internal corporate pricing maneuvers. It works like this: charge the U.S. operations high prices for goods made offshore and imported back to the U.S., so that there are little profits to book in the U.S. Then shuffle foreign-made profits around to those countries with super-low tax rules and rates. Book the profits there and pay the lowest rates. Finally, refuse to pay the U.S. foreign profits tax on even those reduced profits booked offshore.
The corporate pricing games that shift profits to offshore subsidiaries was made possible, in large part, by an IRS tax rule created in the Clinton administration in 1995. This rule is referred to as the Check the Box loophole. It enables multinational U.S. companies to check a box on its U.S. tax forms that identifies a foreign subsidiary of the company as a disregarded entity for purposes of paying taxes. The related Look Through loophole, then allows the company to move profits between subsidiaries in its offshore operations.
Some of the favorite places to shuffle foreign earned profits are Ireland, the Netherlands, and Bermuda. The Netherlands is preferred because it allows a company to avoid all withholding taxes, that’s called the Dutch Sandwich. Shuffle the profits there, and then on to Ireland with its 5-6 percent effective tax rate. Better yet, incorporate the company in Ireland in the first place and book all offshore profits there to begin with. Shuttle the profits through Ireland to Bermuda, where the effective rate is almost zero, and the combined loophole is called the Double Irish. Or how about a Dutch Sandwich with a Double Irish? It all sounds humorous, but it isn’t. Apple Corporation last year avoided $9 billion in U.S. taxes by manipulating its profits in this manner. And remember, it’s not just actual profits earned offshore, but U.S. de facto profits switched to offshore subsidiaries by means of internal company pricing, profits then shuffled around to low tax locations like the Netherlands, Ireland, and Bermuda. Google Corp. is another clever manipulator of the arrangements, earning all its foreign income in Ireland, which it then routes through the Netherlands to avoid all withholding taxes.
The result, by 2004, was the accumulation of more than $650 billion of U.S. multinational corporation profits in their offshore subsidiaries, retained there and not brought back to reinvest in the U.S. or to pay corporate income taxes to the U.S. government, as U.S. politicians simply looked the other way and allowed it to continue.
During 2001-03 George W. Bush also pushed a massive tax cut through Congress, involving tax cuts to personal incomes in general and in capital gains and dividend taxes for wealthy investors in particular. It has been estimated those tax cuts amounted to more than $3 trillion over the following decade, more than 80 percent of which went to the wealthiest U.S. households. The same Bush tax cuts were then extended for two years, from 2010-2012, by the Obama administration, costing another $450 billion to the U.S. Treasury and adding the same to the record U.S. federal deficits and the debt. The estimated further cost to the U.S. Treasury to extend the same Bush tax cuts for another decade, 2012-2022, was $4.6 trillion more, according to the Congressional Budget Office research arm of Congress. The Fiscal Cliff deal of January 1, 2013 extended $4 trillion of that $4.6 trillion. That’s more than $7 trillion in tax cuts, past and future, the vast majority of which benefit wealthy investor households in the U.S. But all that represents Personal Income Tax cuts. Corporate Tax cuts since 2001 are another, additional set of cuts.
In 2002, Bush cut corporate taxes as well by hundreds of billions of dollars, in the form of new rules for accelerating corporate depreciation write offs. Depreciation write-offs on business equipment is another kind of corporate after tax profits that doesn’t show up in the latter totals. It is income that corporations retain, but must be used for subsequent re-investment in plant and equipment. But that reinvestment can occur offshore, not necessarily in the U.S. And so it has, as U.S. corporations’ foreign direct investment has surged since 2001, as investment in the U.S. has stagnated.
The Bush administration then followed up its 2002 business tax cuts via depreciation acceleration, with another round of major corporate tax cuts in 2004. At the same time, in 2004, Bush declared a tax holiday for multinational corporations on their foreign profits, now accumulated to more than $650 billion. The multinationals were then offered a sweet deal: repatriate some of the $650 billion back to the U.S. and pay only a 5.25 percent official corporate tax rate instead of the official 35 percent rate. The precondition of the deal was that the repatriated funds had to be reinvested in the U.S. to create jobs. About $300 billion of the total was repatriated, but the effective rate paid was only 3.6 percent, not the even-reduced 5.25 percent. And the money was not spent on investment and job creation in the U.S. Instead, it was used mostly to buy back stock and to finance mergers and acquisitions of competitors.
This sweet deal set a precedent. Multinational corporations returned to the pricing practices loopholes noted above and continued to amass even greater profits. Today, the profits and cash hoarded offshore in non-taxable subsidiary disregarded entities and shuffled around to Ireland and other places is no less than $2 trillion. The practices were allowed to continue under Obama in 2009 and again in 2012 with the latest Fiscal Cliff tax deal of last January 2013. In 2012 alone, another $183 billion was added to the multinational corporate offshore cash pile.
For the past two years at least, multinational corporations have attempted to repeat the 2004 sweet deal they got from Bush. They are once again lobbying Congress, and bills have been introduced, to permit an average 8 percent repatriation tax if they bring back some of the $2 trillion now held offshore. At the same time, multinational corporations are pushing to sweeten their corporate tax scenario permanently on even more generous terms. They want tax rules that in effect remove all taxes on U.S. corporate income, by moving the U.S. to what is called a territorial tax system. That means they would pay no U.S. taxes on income earned offshore. That would result in redirecting even more U.S. earned profits to offshore subsidiaries via internal pricing games, and paying even less than the mere 2-4 percent on offshore profits that they pay today. Today’s effective 12 percent U.S. corporate tax rate would thus fall even further. That almost total elimination of the U.S. Corporate Tax would reduce U.S. total federal tax revenues by $60 to $100 billion annually. Equally important, it would introduce a major new and further incentive for multinational corporations to shift even more U.S. jobs offshore.
The Tax Code Overhaul Bill
As incredible as it may seem, this proposal has almost total support within Republican ranks in Congress and among a significant number of Democrats. The proposals are included in legislation now moving rapidly through both houses of Congress as part of a proposed major Tax Code Overhaul. Another major corporate tax cut included in that legislation—supported completely by both parties and already proposed by the Obama administration—is to reduce the official corporate tax rate from the current 35 percent to 28 percent (or even lower as proposed by House Ways & Means chair, David Camp). All sides support at least the 28 percent reduction. If passed, it would mean an even lower effective U.S. corporate tax rate than the current 12 percent and even less corporate taxes paid going forward. And if the territorial tax proposal wiping out virtually all multinational corporate taxation should also pass as part of the Tax Code overhaul, that would reduce the effective Corporate Tax rate and corporate tax payments to the federal government by even more.
The prospect of a major Tax Code Overhaul occurring by year end 2012 or in 2014 is not improbable. It was declared the main legislative proposal objective by both parties in Congress earlier this year, before the recent debt ceiling-government shutdown debacle intervened this past September-October 2013. And as this writer has repeatedly predicted, the Tax Code overhaul may provide the political-economic glue for an eventual Deficit-Debt deal and agreement yet to come in early 2014. It provides excellent cover for the Obama administration, which is seeking some kind of political cover in the form of smoke and mirror token tax loophole reduction cover to justify Obama’s proposed cut in the corporate tax rate from 35 percent to 28 percent. It could also provide a cover for the right wing Teapublican faction in the U.S. House of Representatives, allowing to claim the next deficit deal was tax neutral in theory (if not in fact). Both sides would then cut Social Security and Medicare spending, while restoring defense cuts under the prior sequester spending reduction agreement already going into effect. Both then go home declaring victory while corporations end up paying less in taxes and middle America getting less in entitlement benefits.That U.S. multinationals are not paying more than their international competitors in other countries does not mean that corporate taxation is not declining worldwide virtually everywhere. It is. It is just that U.S. multinationals have reduced their effective tax rate through massive loopholes and outright refusal to pay taxes, while other countries have chosen to cut the official tax rate for their corporations.
There is, in fact, a global corporate tax race to the bottom in progress, analogous to the race to the bottom between U.S. states. The cases of Ireland, the Netherlands, and other nation states functioning as tax shelters is posing a major challenge to western economies, where tax revenues at all levels are under pressure as economic recoveries prove anemic, short, and shallow since 2009. Barely growing economies do not create businesses or jobs that pay taxes. The insufficient volume of jobs that are created are increasingly low paid, part time, contingent service sector jobs as well. That means less federal tax revenues. That means, in turn, slow or stagnant income growth, which translates into low consumption. That results in corporations investment elsewhere offshore in faster growth emerging markets instead of in the U.S., Europe or Japan—as is the case. It becomes a virtueless cycle of low income-low growth, feeding the incentive to redirect jobs, investment, and corporate operations from competitors to one’s own economy. A leading means by which to redirect becomes lowering corporate taxation.
Some feeble efforts to slow the global corporate tax race to the bottom has begun to emerge in Europe and elsewhere. However, the effort thus far has not produced many tangible results.
Four Corporate Tax Myths
Myth #1: U.S. Multinational Corporations Pay the Highest Rates in the World. When an adjustment is made for tax loopholes and offshore profits and tax manipulation, this just isn’t the case. Moreover, claims that U.S. corporations pay more almost always ignores the picture of total corporate taxation in other countries. Often provinces and other district level political jurisdictions make corporations pay more than do U.S. states, with their current effective rates in the low single digits.
Myth #2: Lower the 35 percent Corporate Tax Rate and U.S. Multinational Corporations will repatriate much of their present $2 trillion offshore cash hoard. That will create investment and jobs in the U.S., and more federal tax revenue. Believe this only if you believe, somehow, U.S. multinational corporations have changed ethically since the 2004 manipulation of this proposal. They have a precedent they know they got away with before. There’s no reason to believe they won’t act the same again, and that includes using the repatriated profits to buyback stock and buy up competitors. Another indicator of their true intentions is their current hard press for a territorial tax system.
Myth #3: Business Tax Cuts Create Jobs. Evidence since 2001 is conclusive that tax cuts for corporations do not produce jobs—at least not in the U.S. The U.S. for more than a decade, has a serious, structural and chronic problem of job creation. Trillions of dollars in tax cuts for business have not produced more jobs. Despite a 20 million plus increase in the U.S. population since 2000, the size of the workforce remains about the same. Moreover, high paying jobs in manufacturing and construction continue to disappear at an alarming rate. Of the nearly 18 million employed in manufacturing in 2000, less than 12 million remain today. Furthermore, evidence is strong that more tax cuts translate into investment abroad and in job-displacing equipment in the U.S. Corporate Tax cuts don’t create jobs, they destroy them. If the U.S. were really serious about business tax cuts and job creation, it would not provide one penny of tax cut for businesses until jobs were first created. Tax cuts after job creation, not before. Nor would it allow corporations to claim tax cuts for investment-jobs created offshore, which it does now.
Myth #4: Corporations Now Pay What Amounts to a Double Tax. This argument is that both corporate profits are taxed as well as profits distributed to shareholders in the form of capital gains and dividends. Thus both amount to a double taxation, taxing persons for capital gains-dividends and taxing corporations for the original earnings as profits.
But if corporate America wants to retain the legal designation of corporations as persons (corporate personhood) and all its political and economic advantages, then there is no double taxation issue. All persons are being taxed. Why should corporations, as persons, not be taxed? Or wealthy shareholders receiving capital gains from stock buybacks and dividends payouts not be taxed. If both are persons, both should be taxed. If corporate apologists want to eliminate double taxation, then they should propose to eliminate corporate personhood as well.
Tax Reform Proposals
Here is a short list of proposals to reverse the decline in corporate taxation and make corporate America pay its fair share, returning to the 32 percent share of total federal tax revenues pain in previous decades, ending the race to the bottom and raising $1 trillion a year that would eliminate all fedral and state budget deficits.
Proposal #1: Make the Effective Corporate Tax Rate 32 percent—the official rate in effect in 1954. Make it a flat rate and eliminate all 80-100 current special loopholes.
Proposal #2: Eliminate all DTAs (deferred tax adjustments) that allow corporations to pay current and future taxes due out of tax credits accrued in the past. End five year averaging.
Proposal #3: Require Multinational corporations to pay the full 35 percent rate on foreign earnings, including on the $2 trillion held in offshore subsidiaries today. If they refuse to pay the back taxes on the $2 trillion, impose a 50 percent tariff on all goods they produce offshore and attempt to import back to the U.S. until the tax is paid.
Proposal #4: Introduce a Financial Transactions Tax on both Financial Corporations and on the portfolio investment operations (financial securities investments) of Non-Financial Corporations with annual earnings more than $10 million or more than 500 employees. That financial transactions tax includes a 1 percent tax on all stock trades, a $100 tax per each $10,000 value of corporate bond trades, a 1 percent tax on all over the counter derivative trades, and a .1 percent tax on all retail level foreign exchange purchases.
Proposal #5: Implement a 0.25 percent increase in the Medicare payroll tax to 1.7 percent immediately, and another 0.25 percent increase after ten years.
Proposal #6: Introduce a 2 percent Business-to-Business value added tax, the proceeds of which would be earmarked for the creation of a National 401k Pool, a Part E of the Social Security Trust Fund.
Proposal #7: Introduce an Inter-State Equilization Tax. Establish a federal recommended 7 percent state level effective corporate tax rate. States that lower taxes to have corporations in another state relocate to their state, must pay one-half the difference for three years to a federal fund earmarked for income and job retraining for workers displaced in the state from which the corporation moved. The corporation relocating must pay the second one-half.
Proposal #8: Impose an offset tariff on goods and services imports from those nations whose effective tax rate is less than 10 percent of the average effective corporate tax rate of its 10 largest trading partner states.
The charge will no doubt be raised that the preceding proposals are not politically feasible in the U.S. at this time. That is true. It means that those political parties and their representatives responsible for the dismantling of the corporate income tax cannot be expected to solve the problems they have themselves created. Neither of the two wings of today’s Single Party of Corporate Interests in the U.S. provides a solution. Neither do the minority fractions within each wing. Each in their own way offers solutions that amount to a return to a past phony golden era that is no longer relevant or possible.
The real solution must begin with the creation of a new grassroots democratic movement—and a political party composed of and representing that movement—that will engage in mass protests and run for office with the intention of assuming the levers of institutional political power necessary to implement such proposals.
The bane of liberal-left-progressive politics in the U.S. today is single issue politics, which is easily repulsed, co-opted, and discouraged. America’s countless single issue movements must unite under a single political banner. There is no lack of political discontent in America today. There is only the absence of a viable political organization. There are no shortcuts. There is only NOW—No Other Way.
Jack Rasmus is author of Obama’s Economy: Recovery for the Few and host of the radio show, Alternative Visions, on the Progressive Network. His website is www.kyklos productions.com, and blog, jackrasmus.com. His twitter handle is #drjackrasmus.