It seems like every week some serious publication puts out a new graph or pie chart that shows how the class divide is widening in America; and while citizens suffer under the crushing weight of austerity, the über-rich abscond with taxpayer-funded subsidies. Ordinary citizens are examining corporations and the upper-one-percenters with a big magnifying glass, and what they’re seeing isn’t pretty, especially when contrasted with demands that citizens surrender some of their most sacred social programs.
Simply put, they are extremely pissed off. One of the newest vehicles for their outrage is US Uncut, a group that arose specifically to protest this two-tier system that demands endless sacrifice from the majority as it facilitates corporate theft.
Early this year, British journalist Johann Hari wrote a Nation article, “The UK’s Left-Wing Tea Party” [February 11], in which he detailed the sudden and impressive emergence of UK Uncut, a British movement formed to curb corporate tax dodging. Hari’s wish was for the cause to cross the pond and take root in America.
It took only about a month for that to happen. A young man named Carl Gibson from Mississippi read Hari’s article and immediately felt inspired to launch US Uncut. Gibson set up a website, and almost overnight franchises sprang up across the country.
The anti–corporate-tax-dodging movement has seen its ranks expand dramatically in the past few months. In March more than forty chapters participated in a US Uncut day of action. Almost a month later, on Tax Day, more than 100 chapters protested corporate tax dodging. In Washington, DC, Gibson led a flash mob occupation of a BP gas station that shut it down. US Uncut organized that event in conjunction with the environmental group Power Shift in response to BP’s $13 billion tax credit from the Deepwater Horizon oil spill, which surpasses the Environmental Protection Agency’s entire annual operating budget.
US Uncut’s impressive growth is thanks in large part to the nationwide budget-cut backlash. The group believes that instead of asking ordinary people to sacrifice, the government should first demand that corporations pay their fair share in taxes and put an end to tax havens, which rob the United States of $100 billion every year.
US Uncut’s main targets include Verizon, Bank of America, FedEx, General Electric and BP. Verizon made nearly $12 billion in pretax US earnings last year but has paid no federal income taxes for the past two years. However, the company did spend more than $34 million on lobbying during that time.
Interestingly, Verizon is able to avoid paying its taxes by creatively redirecting profits to its foreign wireless partner, Vodafone, a longtime target of UK Uncut because of its equally unscrupulous tax-dodging practices. Vodafone claims that a large portion of its revenue should not be subject to British taxation because the company reroutes the cash through Luxembourg, a haven with a tax rate of less than 10 percent. Vodafone doubled its profits in 2010 by using this funneling scheme, which robbed British taxpayers of billions of pounds that could have gone toward funding communities.
Another target of US Uncut is GE, America’s largest firm, which hasn’t paid a nickel in federal income taxes this year—and will actually receive a $3.2 billion tax credit. Meanwhile, Bank of America paid nothing in federal taxes last year and got nearly $1 billion from taxpayers—not counting the $45 billion it received during the bailout.
And the list goes on. In fact, two-thirds of corporations in America don’t pay any federal income taxes, according to a 2008 Government Accountability Office report. Corporations skirt this messy issue by saying that while they don’t pay federal taxes, they pay heaps in state and local taxes—a claim that is frequently untrue.
According to an analysis of Intel Corporation’s 2010 financial statements by Philip Mattera, research director of Good Jobs First, the company paid just $51 million in state and local taxes (less than 1 percent of its $13.9 billion in pretax domestic income). In the previous two years, Intel reported negative amounts. At the same time, the company aggressively sought subsidy deals and preferential tax treatment. Intel “has received hundreds of millions of dollars in property tax abatements and sales tax exemptions in states such as Arizona, New Mexico and Oregon,” Mattera notes.
Many of the taxes Intel has avoided should have gone to paying for schools. Ironically, as Mattera points out on the watchdog website Clawback.org, former Intel chief executive Craig Barrett has criticized Arizona’s education system, calling it so weak that the state can’t attract new business. Arizona’s 2012 budget will cut $148 million for K–12 education and $198 million for public universities. Although collecting Intel’s dodged taxes and ending its sweetheart deals might not completely fill the budget hole, that revenue could certainly set Arizona back on the path of fiscal solvency.
Last year, Boeing got a tax refund of $137 million from state and local governments even as it earned more than $4 billion in pretax profits, according to Mattera. The company is well-known for its thuggish tactics when negotiating with Washington State, the company’s manufacturing base. In 2003 Boeing made it clear that if the state did not provide a twenty-year, $3.2 billion package of tax credits, it would build its new Dreamliner aircraft elsewhere. The state conceded—but when it came time for Boeing to open a second production line in 2009, the company went to South Carolina, which offered a staggering $900 billion subsidy package. Boeing indicated that it didn’t like dealing with the threat of strikes in Washington and preferred union-free South Carolina. (The National Labor Relations Board has just decided that this amounted to illegal retaliation, and ordered the company to shift the production line to Washington.)
Companies like Boeing frequently hide behind the mantra of “job creation” when they receive such lavish deals, and yet South Carolina’s unemployment rate remains above the national average. Meanwhile, South Carolina’s jobless benefits are among the country’s least generous (the weekly maximum jobless benefit is among the nation’s ten lowest). And thousands of people are protesting legislators’ plans to cut $700 million from the budget by hacking away at Medicaid and education programs.
The detrimental ripple effects of education cuts are likely to far outweigh any temporary benefit the state might have gained from luring Boeing into its borders. Companies like Boeing aren’t going to be super-eager to hire the products of a failing South Carolina education system.
Parochially and federally, corporations are paying fewer taxes than ever. Corporate income tax payments made up only 5.4 percent of total state tax collections last year, down from 10 percent in 1980, according to the US Census.
“I have one dollar in my wallet. That’s more than the combined income tax liability of GE, ExxonMobil, Citibank and the Bank of America. That means somebody is gaming the system,” says Gibson.
Those “somebodies” are companies with enormous amounts of money that lobby Washington to rig the game in their favor. Public Campaign, a nonpartisan watchdog organization, found that twelve large American corporations collectively spent more than $1 billion over the past ten years to influence Washington: ExxonMobil, Chevron, ConocoPhillips, Valero, Bank of America, Citigroup, Goldman Sachs, Boeing, FedEx, Carnival, Verizon and GE.
It is because of this two-tier system that US Uncut’s movement continues to grow. The group comprises many young people who are fairly new to the world of activism. Kevin Shields, founder of US Uncut Philadelphia, is a senior in high school. I asked him why he decided to start his own chapter. “For me, protesting and getting involved in activism is just something you do,” he says. “If you don’t do it, you’re really missing out, and you’re participating in your own exploitation.