As nationwide budget protests continue this week, Treasury Secretary Timothy Geithner is prepared to unveil the Obama administration’s plan to lower the top corporate tax rate from the current 35 percent to less than 30 percent, and as low as 26 percent.
In order to pay for the cuts, the proposal calls for closing loopholes and slashing exemptions. Politico reports that Geithner has already begun meeting privately with CEOs, academics, labor unions, and liberal and conservative think tanks, and his aides say he is “encouraged by the response.”
Part of that optimism stems from the fact that Democrats and Republicans are both allies of the business world.
One top business lobbyist, speaking on condition of anonymity, said corporate tax reform should be “the easiest piece” of a complex fiscal bargain “because you have people in both parties in the business community.”
The surge in unemployment comes at a time when US corporations are more profitable than ever. The end of 2010 saw some of the biggest gains in the business world, according to data from the federal Bureau of Economic Analysis. Corporations reported an annualized profit of $1.68 trillion in the fourth quarter, up from the previous record of $1.65 trillion in the third quarter of 2006.
In the first quarter of 2011, Exxon-Mobil, the world’s biggest and most profitable corporation, raked in $10.7 billion. That’s a 69 percent increase over the same quarter last year, and the highest quarterly profit since 2008. This is happening during a time when citizens are searching underneath the couch cushions to scrape together enough change in order to fill their gas tanks so they can go file for unemployment benefits.
Exxon also happens to be one of US Uncut’s top targets. The oil giant uses offshore subsidiaries in the Caribbean to avoid paying taxes in the United States. The company paid zero US income tax in 2009, while enjoying billions in taxpayer-funded subsidies and its CEO’s total compensation reached over $29 million.
Now, in addition to raking in record profits by sheltering revenue in foreign tax havens, Exxon and its Fortune 500 comrades, rest on the brink of enjoying more sweeteners in the form of tax breaks.
Of course, tax havens are only one part of a rigged system that allows corporations to make bank during economic recession. There are also the practices of government subsidies, (read: taxpayer subsidies) outsourcing jobs, and buying off politicians that allow top corporations and their CEOs to flourish while one in four American children survives on food stamps.