Tax Breaks Benefit Billionaires
Tax Breaks Benefit Billionaires
Who benefits from the Microsoft billion dollar tax break?
The Microsoft tax scam artificially inflates Microsoft earnings and stock prices by about 2%.
32% of all Microsoft stock is owned by two billionaires and ten wealthy Wall Street Corporations.
Of course, artificially inflating the price of a stock mainly benefits those who SELL Microsoft stock. Since February 1, 2010, the biggest amount of Microsoft stock has mainly been sold by 2 people: Bill Gates sold 160 Million shares for $400 million dollars and Steve Ballmer sold 75 million shares for $200 million dollars. In short, the bulk of the benefit of the Microsoft Billion dollar tax break has gone to two billionaires.
Microsoft currently spends about $6 million per year buying off legislators and members of Congress in order to retain their billion dollar per year tax break.
Thus for every dollar in contributions to politicians, Microsoft gets back about $200 in tax breaks. No wonder our elections are being sold to the highest bidder!
http://www.opensecrets.org/orgs/lobby.php?id=D000000115
Corporations now spend millions of dollars every year buying elections for the same incumbents who give them BILLIONS in tax breaks!
“We're in the midst of a corporate crime wave.”
Ralph Nader June 2010
One million children in our State are being forced to endure the highest class sizes and the lowest school funding in the nation just so a couple of billionaires can buy bigger boats!
As just one example of how Microsoft costs Washington State Tax payers hundreds of millions of dollars, consider the following story
No Jobs Means No Recovery
Even the current State Budget deficit of $5 billion is peanuts compared to the appalling $30 billion increase in corporate tax breaks in the past ten years. In fact, the majority of the decline in State revenue is not from the decline in sales taxes related to the recession. Instead, it is from the decline in sales taxes, property taxes and B & O taxes from corporate tax breaks.
We have already pointed out one glaring drawback of corporate tax breaks – namely that they do not actually create jobs. Instead, it is small businesses which create over 90% of all new jobs in our State. Small businesses are harmed by corporate tax breaks for their larger competitors because tax breaks create an unfair advantage for large corporations. Small businesses do best when there is a level playing field. Eliminating corporate tax breaks would therefore create more jobs.
According to a 2010 report by the US Commerce Department, over the last decade American multinationals (essentially all large American corporations) eliminated 2.9 million American jobs while adding 2.4 million jobs abroad.
Can you spot the elephant in this room?
$4 billion… That's how much the state legislature cut just 7 months ago from health care, education, and other core services that support our communities -- the 99%. That's on top of billions in cuts already enacted since the recession began.
$0... That's how much lawmakers cut from tax breaks benefiting Wall Street Banks, large corporations, and the wealthiest 1%.
The REAL cause of our economic crisis is Out of Control tax breaks for the rich. Firing thousands of teachers will only make things worse. Raising the Sales Tax on poor and middle class families – who are struggling to stay in their homes and put food on the table - will only make things worse. The only path to recovery is a fair tax structure – including rolling back tax breaks for wealthy corporations.
"As the tax exemptions pile up, the cost is mounting, and our tax code looks more and more like a slice of Swiss cheese. The real question is whether each exemption is the best use of taxpayer money. It makes no sense to spend $5 million on an exemption that creates 100 jobs when it also means eliminating $5 million in funding for core services that leads to the loss of 1000 jobs."
Anne Martens, a spokesperson for the Economic Future Coalition, an alliance of more than 140 organizations across the state concerned about deep proposed budget cuts
How Many Jobs will our State lose if we do not roll back corporate tax breaks?
If the legislature goes along with the Governor’s Proposal to Cut $2 billion from the State Budget, it cost 22,000 public and private sector jobs – at a time when our State has a workforce of nearly 4 million, yet less than 3 million jobs – for a true unemployment rate of more than 25%.
Other Drawbacks of Corporate Tax Breaks
Besides the facts that corporate welfare costs our State billions of dollars without creating a single job, there are several other glaring drawbacks of corporate tax breaks. These include:
1. Corporate Tax breaks are unconstitutional. If our State legislature was complying with its constitutional mandate to fully fund schools (including the construction of schools), and had a few billion dollars left over after meeting its constitutional duty, it could be argued that it would be legal to pass out a few billion in corporate tax breaks (or better yet, lower the taxes on the rest of us). But the fact is that our State is 49th in the nation in school funding. We also have the highest class sizes in the nation. So protecting billions in corporate tax breaks, while cutting billions in school funding, is unconstitutional. The State Constitution is the highest law in our State. No one should support a system which is violation of the highest law in our State.
2. It is an unfair distribution of taxes. When corporations do not pay their fair share, everyone else has to pay more. For example, the property taxes on every homeowner in King County is about $1,000 higher than it was just a few years ago. These extra thousand dollars do not go to pay for schools or social services. Instead, this money goes to pay for tax breaks for the richest corporations in the history of our planet. Imagine how much it would benefit our economy if every homeowner had an extra thousand dollars to spend on local businesses every year.
3. There are no strings attached. Corporate tax breaks might be justified if there were some kind of jobs created or other public benefit. But because there are no strings attached, corporations use the money for the exact opposite of the intended purpose. For example, Boeing has received more than $10 billion in tax breaks since 2003. What did they do with this money? They used it to build a plant in South Carolina to ship thousands of jobs out of our State. That is right. You as a Washington State tax payer paid to build the plant in South Carolina.
4. State tax breaks do not even benefit corporations that much. If corporations were required to pay State taxes, they could deduct their State taxes from their federal taxes. For example, Microsoft makes more than $50 billion per year. They get State tax breaks of $200 million per year. This is less than one percent of their profit margin. And the whole thing could be deducted from their federal taxes. It would not harm Microsoft at all to pay their fair share of State taxes. But $200 million would be enough to hire 2,000 teachers.
5. Corporate tax breaks harm schools and harm children. Our State used to be 11th in the nation in school funding. Yet now we are 49th. The only thing that has changed is the huge increase in corporate tax breaks. It has devastated funding for our public schools. Our children deserve a fair chance at a successful future. The only way that will happen is to put an end to unfair corporate tax breaks and return funding to our public schools.
6. Corporate tax breaks corrupt our Democracy. Because corporations are able to feed nearly unlimited funds to their corporate candidates, elections wind up being sold to the highest (most corrupt) bidder. There is not a level playing field when one candidate can outspend another by more than 20 to 1. In case you are wondering why there is so much corruption in Olympia and Washington DC, it is because of the influence corporate money has on campaigns. Get rid of corporate tax breaks and you get rid of the incentive to bribe politicians.
7. Corporate tax breaks led to our current economic crash. Corporations took over Congress in the 1990’s. The first thing they did was pass deregulation of corporations – especially deregulation of banks and oil companies. This led to a lot of illegal corporate shenanigans (such as the Enron scandal and Wall Street derivative speculation). Bailing out these banks and oil companies has cost tax payers more than $7 trillion and caused a collapse in home prices and millions of lost jobs which is basically why were are now facing the worst financial crisis since the Great Depression. The harm that the recent rise in corporate tax breaks have inflicted on our economy has led many to believe that there should be an outright ban on corporate tax breaks.
Other Corporate Tax Break Myths
The primary objection to reducing corporate welfare is that it might cost the State jobs. However, just the opposite is true. Granting tax exemptions to multi-national corporations actually INCREASES JOB LOSSES! For example, Boeing has received over $2 billion in tax breaks in the past 7 years. Shortly after getting this no-strings-attached free money, Boeing moved thousands of jobs out of State. Even worse, Boeing used this $2 billion dollar windfall to build their new union-free plant in South Carolina. So Washington tax payers paid to have thousands of jobs moved out of State and to assist Boeing in their ongoing efforts to bust the Machinists Union! Microsoft has also used their windfall profits to build facilities in other countries and engage in union busting activities. Clearly, granting multi-national corporations huge tax breaks results in fewer jobs, not more jobs.
The real problem in granting corporate welfare to multi-national corporations is that the money is taken out of State and thus acts as a drain on our economy. If we are going to grant tax exemptions, we should give it to small businesses which are more likely to invest the money in State than out of State.
Another objection is that corporations need the tax breaks to stay profitable. This is also not true. Both Boeing and Microsoft were making billions in profits in the years before the tax breaks. Even if these tax breaks were completely eliminated, both companies would still be making billions in profits. They both would still be among the richest corporations in the history of the world. In fact, since State taxes are deductible from federal taxes, requiring Boeing and Microsoft to pay taxes would hardly even reduce their profitability. Instead, it would simply amount to a transfer of a half a billion dollars from the federal tax rolls to the State tax rolls. 