My rant about tax inequality

I sent an e-mail and a letter to each representative and senator of mine at the state and federal level.

I've been unemployed for almost 15 months now. I did get a part time job with the Postal Service (with no benefits) at a nearby post office. But there's not much else for work. There's too many unemployed vying for too few positions.

I wrote them because i'm absolutely flabbergasted. The reason i'm angry beyond all belief is i had my taxes done last week. I'm single with no deductions (that's my own fault, huh?) and i had to pay in almost $800 this tax season. It wiped out half of my savings account which i've been slowly dipping into for the last year. I started off with $4,000 in that account at the time of being laid off and now have around $1,100 left over after mailing off "my share".

Why am i furious? It's the federal governments fault that we're in the economic shape that we're in. The government aided in this situation we are in. And then we have our almighty representatives and senators in D.C. pissing away valuable time on a health care bill and paying far less attention to the job and economic situation. The stimulus bill was a failure for the economy. It was nothing but a pork-laden bill to please special interests. The recent jobs bill is a little too late. I'm incensed at the politicians at the local and federal level. I'm not the only one either. I'm just regular folk trying to make a go of this mess the feds got us into and are failing to get us out of.

So, as the politicians dither on and on, especially the federal politicians with their wonderful perks, us regular folks are going down the drain. Why the hell should an unemployed person have to pay in when the money is scarce to start with? I'm single with no dependents which means i have no deductions. I own no home because of my recent move (I was looking at homes till the economy took a dump and then losing my job).

So, here i am. Losing money from my savings to pay the state and the feds. It's absolutely pathetic that our state and federal government can't help those who are victim to what those people enabled to happen.

Here's the details: I made only $21,000 last year. That was the combination of unemployment, the post office and the 5 weeks i worked at my old job when i got called back. Plus the 1st week of 2009 before i got the layoff. Then there was taxes paid on my severance pay and my vacation pay that i had accrued.

So, i only qualified for around $350 a week on unemployment. With state and fed taxes taken out, it leaves one with around $270 a week. After bills (a weekly budget i have set in place) and groceries, there's nothing. Of course, then there's no job to get out of this either. So, i elected to not pay taxes on my unemployed last year.

Then..... there's the Make Work Pay credit i qualified for (from the Bama stimulus bill). That credit was $400. well, there was one of that on the sate level, so my bill to the state of Minnesota was higher than the bill to the feds. Then... there's the monthly payment i get from the VA every month (i'm a disabled vet). Guess what? That lessened my credit to the feds on the Make Work Pay credit. Ooops. Looking out for those vets, aren't we? Then there's the state credit for paying on property taxes that renters get. Well, i was getting $480 back (pay out in Sept by Minn). Well, when the state sees that i get the VA payment, it lessened my credit by $50.

But if i was married, had kids and had a home (all deductions), i would pay nothing. Instead, an unemployed veteran that is partially disabled has to pay in after barely breaking 20 grand for the year. There's deadbeats across this country who won't work and pump out kids like an auto assembly line at Ford that get money back without ever paying in a single dime. My ex-girlfriend was/is a perfect example. She made about $15,000 a year. She was a lazy @ss and never tried to get a better job even when they offered her more education at company expense. Yet, she claimed 2 of her kids on the EIC and got back $3,000 yearly and then pissed it away on garbage instead of her kids. This isn't a unique situation. There's thousands of people like that. Yet, i get the shaft.

My whole point with this? The politicians at the state and federal level write the tax laws. They do not give a fµck about the little guy (the Democrat line). I wrote all 6 of my reps and senators on the state and feral level. The only one to respond with a personal reply was my state senator. Out of all my reps and senators, this guy is the only Repub. One of my federal senators wrote back (via e-mail) and it was the typical canned response. The response did NOT even address a single thing i had said nor was it even closely related.

This is why the movement to boot out fµqqed up politicians is on the rise. And i'll never vote for another Democrat ever again. Never.

My rant is done.

I could repeat the thing that most Conservatives always tell me when I try to explain to them why we should provide lower paying jobs with certain benefits paid for by the government: "It's not the government's job to make up for where you lack. You took the job and you accepted the salary, so you have to learn to live with that."
But you know me, and you know I don't think so. The political corruption here is a killer and is something that needs to be worked on ASAFP. The Stimulus Bill didn't work on par with how much it cost and one thing that I don't like is that politicians are so secluded from the average citizens, it's not even funny. They sit in D.C. like the gods sit on Mt. Olympus and have no clue what's going on and what is affecting who.

My rant isn't about me not wanting to pay taxes at all. It's the silliness of the situation i'm personally in. The leeches who pay nothing have no sympathy and the rich don't either. They have their 9 million deductions.

It just goes to show how fµqqed up it is on this level (unemployment). The other fµqqed up part is the lack of response from those who represent me. It's funny how the only one who actually did reply addressing my point was my state senator... the only Repub out of all my reps/sens.

That's because the Repub knows he has to work for it if he wants to get elected in Minnesota.

But look at who you can vote for. It's 1 politician against another... there's no average Joe you can vote into office. It takes so much money to campaign, that it's virtually impossible to run for any kind of office without a 7 figure salary.

What The Top U.S. Companies Pay In Taxes
Christopher Helman, 04.01.10, 3:00 PM ET
HOUSTON -
As you work on your taxes this month, here's something to raise your hackles: Some of the world's biggest, most profitable corporations enjoy a far lower tax rate than you do--that is, if they pay taxes at all.

The most egregious example is General Electric. Last year the conglomerate generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion.

Avoiding taxes is nothing new for General Electric. In 2008 its effective tax rate was 5.3%; in 2007 it was 15%. The marginal U.S. corporate rate is 35%.

In Pictures: What The 25 Top U.S. Companies Pay In Taxes

How did this happen? It's complicated. GE's tax return is the largest the IRS deals with each year--some 24,000 pages if printed out. Its annual report filed with the Securities and Exchange Commission weighs in at more than 700 pages.

Inside you'll find that GE in effect consists of two divisions: General Electric Capital and everything else. The everything else--maker of engines, power plants, TV shows and the like--would have paid a 22% tax rate if it was a standalone company.

It's GE Capital that keeps the overall tax bill so low. Over the last two years, GE Capital has displayed an uncanny ability to lose lots of money in the U.S. (posting a $6.5 billion loss in 2009), and make lots of money overseas (a $4.3 billion gain). Not only do the U.S. losses balance out the overseas gains, but GE can defer taxes on that overseas income indefinitely. The timing of big deductions for depreciation in GE Capital's equipment leasing business also provides a tax benefit, as will loan losses left over from the credit crunch.

But it's the tax benefit of overseas operations that is the biggest reason why multinationals end up with lower tax rates than the rest of us. It only makes sense that multinationals "put costs in high-tax countries and profits in low-tax countries," says Scott Hodge, president of the Tax Foundation. Those low-tax countries are almost anywhere but the U.S. "When you add in state taxes, the U.S. has the highest tax burden among industrialized countries," says Hodge. In contrast, China's rate is just 25%; Ireland's is 12.5%.

Corporations are getting smarter, not just about doing more business in low-tax countries, but in moving their more valuable assets there as well. That means setting up overseas subsidiaries, then transferring to them ownership of long-lived, often intangible but highly profitable assets, like patents and software.

As a result, figures tax economist Martin Sullivan, companies are keeping some $28 billion a year out of the clutches of the U.S. Treasury by engaging in so-called transfer pricing arrangements, where, say, Microsoft's overseas subsidiaries license software to its U.S. parent company in return for handsome royalties (that get taxed at those lower overseas rates).

"Corporations are paying lower amounts of their profits in taxes now than in the past," says Douglas Shackelford, who teaches tax law at the University of North Carolina at Chapel Hill. "Other countries have been lowering their rates, but not the U.S."

Mind you, not all global megacorps enjoy such low tax rates. Try to muster some pity for Big Oil. ExxonMobil in its 2009 annual report to the SEC, recorded a larger income tax expense than any other U.S. company last year, some $17.6 billion, or 47% of pretax earnings. Exxon's peers Chevron and ConocoPhillips likewise recorded similarly high effective tax rates. The oil companies are oddities among the multinationals because many of the oil-rich countries where they do business levy even higher taxes than the U.S.

Exxon tries to limit the tax pain with the help of 20 wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands that (legally) shelter the cash flow from operations in the likes of Angola, Azerbaijan and Abu Dhabi. Exxon has tens of billions in earnings permanently reinvested overseas. Likewise, GE has $84 billion in overseas income parked indefinitely outside the U.S.

Though Exxon's financial statement's don't show any net income tax liability owed to Uncle Sam, a company spokesman insists that once its final tax bill is figured, Exxon will owe a "substantial 2009 tax liability." How substantial? "That's not something we're required to disclose, nor do we."

Naturally the Obama administration wants to put an end to this. It has proposed doing away with tax deferrals on overseas income. If the plan passes, a U.S. company that pays a 25% tax on profits in China would have to pay an additional 10% income tax to Uncle Sam to bring it up to the 35% corporate rate. "Eliminating deferrals would put U.S. companies on an unlevel playing field," says the Tax Foundation's Hodge, "especially if competing with the likes of Germany, which only taxes companies on domestic operations."

Hewlett-Packard and others among the top 25 state in their annual reports that if Obama's tax measures pass it would mean a certain tax hike, probably amounting to billions of dollars.

Would no more tax holiday for GE really end up helping Mr. and Mrs. Taxpayer? Doubtful. "The average Joe should be in favor of lower corporate taxes," says Hodge, "because ultimately they are paying the corporate income tax. Either as workers, getting lower wages and fewer jobs, or as consumers, paying higher prices, or as retirees, getting lower dividends and earnings on their investments."

In the same vein, JPMorgan Chase Chief Executive Jamie Dimon has spoken out against an Obama proposal to levy a special tax on banks to recoup bailout costs. "Using tax policy to punish people is a bad idea," said Dimon. "All businesses tend to pass costs on to customers."

In Pictures: What The 25 Top U.S. Companies Pay In Taxes

BubbleBliss wrote:That's because the Repub knows he has to work for it if he wants to get elected in Minnesota.

But look at who you can vote for. It's 1 politician against another... there's no average Joe you can vote into office. It takes so much money to campaign, that it's virtually impossible to run for any kind of office without a 7 figure salary.

He doesn't have to work for it. My district is one of the most conservative in Minnesota. The Dem state rep is a conservative Dem in fact.

It's one ideology against another. That's what it's come to.

Corporations don't pay taxes. You raise them on the corporations and they raise the prices of their commodities. You pay in the end. That's a fact.

Corporations Don't Pay Taxes -- People Do!

Ryan Ellis
May 4, 2009

Today, President Barack Obama unveiled a plan to further subject U.S. companies to double-taxation on their international profits. This will kill thousands of jobs back here at home.

It raises the question, “who pays the corporate income tax?” The answer is, “we do.” Corporations don’t pay taxes—people do. Corporations are legal entities which collect taxes from real live human beings. Here’s how:

Wage Earners. If you earn a wage, chances are you pay the corporate income tax. You do so because your wages are thousands of dollars lower than they would be in the absence of the corporate income tax. According to the Census Bureau, 77 million Americans work for companies which employ 100 or more people. That’s more than 6 out of every 10 Americans with a job. Most of these people work for corporations, who have to pay them a salary with money the government doesn’t take with the corporate income tax.

There’s an emerging consensus among economists that at least $0.60 out of every $1.00 the corporate income tax collects is paid in the form of lower wages (the other $0.40 is paid in the form of lower returns for shareholders, which we will get to in a moment). So if your paycheck isn’t as high as you would like it to be, blame the corporate income tax.

American Families. Corporations make money by selling things to people. If a corporation makes a profit of $1.00, and $0.40 of that must go to corporate income taxes, that “tax wedge” will be built into the price.

Let’s say a corporation wants to make $600 on a computer after taxes. It has to charge you $1000 for that computer, knowing it will have to pay $400 in taxes. You just paid the corporate income tax on that computer. All the corporation did was pass along the cost to you in the form of a more expensive computer. Families pay the corporate income tax.

Seniors and 401(k) Owners. It goes without saying that seniors and shareholders can also be wage earners and consumers, but they also have their own contribution to paying the corporate income tax. We mentioned above how $0.60 on the dollar in corporate taxes comes out in the wash in the form of lower wages. The other $0.40 shows up in the form of lower returns on investment.

Corporations are owned by the millions of 401(k) owners, IRA owners, pension plans, and individual shareholders who buy and hold corporate stock. A majority of adults in the United States are part of this “shareholder majority.”

When corporations have an after-tax profit, they can do one of two things with it: they can return the profit directly to shareholders (a “dividend”). Or, they can retain the after-tax profit in the company, re-investing it to grow the business. When the business grows, the share price rises, and the investor gets to benefit later when he sells the shares (a “capital gain”). Either way, after-tax profits eventually make it back to the investor.

“After-tax” is the key term here. The corporate income tax results in after-tax profits being far lower than the pre-tax profits looked. Corporations also might engage in less-profitable activities in order to avoid paying the corporate income tax.

At the end of the day, $0.40 out of every dollar collected by the corporate income tax ends up making your 401(k) smaller.