For the past thirty years, Republicans have propagated the ridiculous myth that giving tax breaks, special privileges, and entitlements to corporations and the wealthy is good for the economy and benefits all Americans. The claim that wealth “trickles down” to middle-class and poor Americans in the form of increased employment and lower prices has been debunked for years and now there is more irrefutable evidence that enriching corporations and the wealthy does not benefit anyone except the wealthiest 2% of Americans.
Recent reports that corporations and the oil industry made record profits in 2010 coupled with high unemployment and record numbers of Americans living at or below poverty level, belies the Republican claims that enriching the wealthy is necessary to help the economy and therefore, the American people. During the 2010 midterm elections, GOP candidates claimed tax increases on the wealthy, regulations, and government assistance programs killed jobs and would eventually lead to the destruction of the American economy. Since Republicans took control of the House, they have attempted to repeal the health law, financial regulations, and environmental protections because they claimed those programs hampered efforts to create jobs.
As the U.S. economic recovery crawls along at a snail’s pace and more Americans are signing up for government assistance to feed their families, corporations increased their profit margin. Part of the reason corporate profits are up in a weak economy is that production is up and compensation is down. According to the Labor Department, during the fourth quarter of 2010 productivity increased by 2.6% while labor costs decreased by 0.6% enabling corporations to produce more for less. It is a double benefit for corporations because any one of the factors would boost profits, but the combination of higher productivity and lower costs means that even in a slow economy, corporations are prospering while Americans are struggling.
The Republican message machine has been telling the American people that as soon as the corporations start making money they will expand their businesses and begin hiring new employees, but that has not been the case. A report from Fortune 500 on Thursday said that for 2010, corporate profits grew by 81% to a total of nearly $10.8 trillion. If Republican claims were true, corporations and businesses should be expanding and hiring new employees to keep up with the demands for the goods and services being produced, but they are not. The record profits should also mean the government revenue is up but Republicans are unwavering in their objection to tax increases on corporate wealth. It is particularly infuriating that many of the record-setting profits went to corporations that paid nothing in taxes and in some cases, received taxpayer money in the form of rebates, incentives, and government bailouts.
The oil industry is one of the most egregious cases of corporate entitlements from American taxpayers who are struggling to survive. Americans’ tax dollars pay for oil subsidies to companies like Exxon Mobil that paid no taxes and received a little over $150 million in tax rebates. Exxon Mobil holds the number two spot on the Fortune 500 list of largest U.S. companies with $35.6 billion in profits that were bolstered by higher costs at the pump, taxpayer subsidies, and a free pass on royalty payments to the government. Despite the largesse of the American taxpayer, Republicans extended subsidies to big oil and resisted attempts by Democrats to enforce royalties on federal land leases.
The top ten companies in the Fortune 500 list is comprised of three oil companies that enjoy free money from the American taxpayer, one bank that received a taxpayer funded bailout, and an auto-maker that also received a bailout to save it from bankruptcy. Many of the companies on the list paid nothing in taxes and still received refunds that Americans paid for with their tax dollars. In spite of the generosity of the American people, Republicans want to give more to corporations in the form of a lower corporate tax rate.
Republicans are pushing to reduce the corporate tax rate so the companies can be more competitive on the world market, and according to the Republican noise machine, when corporations are more profitable they will expand and hire more Americans. Besides having abject contempt for the well-being of working people, Republicans insult Americans by telling them they have to give more to the wealthy industrialists who have absolutely no intention of expanding operations in the country or stepping up hiring. Republicans want to lower the corporate tax rate drastically and in some cases want them eliminated altogether so the companies pay nothing in taxes. There were suggestions that any tax rate decrease be tied to expansion and domestic hiring, but Republicans railed against the idea saying it is unfair to impose conditions on the “already struggling” American corporations.
A reasonable question to Republicans is; what about struggling American workers? Taxpayers have given corporations and the wealthy low tax rates, subsidies, their jobs, and relaxed regulations for thirty years and nothing has trickled down. During the great recession of 2008, Americans gave bailouts to Wall Street, banks, and the auto industry, but have received nothing in return except lost jobs and lost homes.
The financial crisis that precipitated the bailouts was not caused by working Americans, but they are the ones paying the price. Even as corporations, Wall Street, and banks are reaping enormous profits, the American people are experiencing lower wages and diminished job opportunities. Throughout all of the record profits for businesses and lower standard of living for most Americans, Republicans are pushing for more corporate entitlements.
Last year President Obama and congressional Democrats attempted to take away tax breaks for companies that shipped Americans’ jobs out of the country and Republicans blocked the effort claiming too much government intervention. It is glaringly obvious that Republicans are not interested in creating jobs or improving the economy for working Americans or the country. Their interests are solely in helping corporate America and the oil industry to prosper at the expense of the American people.
In the process, the gulf between the extremely wealthy and ordinary Americans is growing to a point that the editors of Fortune 500 said, “We’ve rarely seen such a stark gulf between the fortunes of the 500 and those of ordinary Americans.” What the editors did not say was that the gulf is exactly what Republicans and their wealthy corporate donors want for America. It is also noteworthy that as corporate tax revenue as a percentage of the GDP is lower than it has been in years, the increased wealth is not trickling down to the people, and corporations are paying less than their fair share.
Americans are struggling and in many cases drowning in an economic morass they did not create and have little chance of escaping. Republicans promised to create jobs, but have worked tirelessly to eliminate jobs with Draconian spending cuts to programs that help the increasing numbers of Americans living in poverty. The corporations are reaping greater profits than ever and taxpayer dollars are filling the coffers of the oil industry, but the promised trickle down is not coming. In the coming weeks, Republicans will attempt to further enrich corporate wealth by lowering the corporate tax rate and their argument will be that when the corporations start making money, they will expand and begin hiring workers.
With this week’s reports about corporate and oil company profits at record levels, the American people should be asking where the jobs are, and why wealth isn’t trickling down. Republicans will respond by saying taxes are too high and that a Black man is in the Oval Office; it is all they know.