‘Made in America’ Just a Political Slogan to Conservatives

by Walter Brasch

Conservatives in Congress have once again proven they are un-American and unpatriotic. This time, it’s because of their fierce approval for the construction of the Keystone XL pipeline.

The pipeline, being built and run by TransCanada, will bring tar sands oil from Alberta to the Gulf Coast. All the oil will be exported. Major beneficiaries, including House Speaker John Boehner, are those who invest in a Canadian company.

Opponents see the 1,179-mile pipeline as environmentally destructive. They cite innumerable leaks and spills in gas pipelines, and correctly argue that the tar sands oil is far more caustic and destructive than any of the crude oil being mined in the United States. They point out the pipeline would add about 240 billion tons of carbon dioxide to the atmosphere. They also argue that the use of eminent domain by a foreign corporation, in this case a Canadian one, to seize private property goes against the intent of the use of eminent domain. Eminent domain seizure, they also correctly argue, should be used only to benefit the people and not private corporations.

Proponents claim it will bring jobs to Americans. The U.S. Chamber of Commerce claims the pipeline would create up to 250,000 jobs. However, the Department of State concludes that completion of the pipeline would create only 35 permanent jobs.

The Republican-led House has voted nine times to force the President to approve completion of the pipeline. In January, with Republicans now in control of the Senate, a bill to support construction of the pipeline passed, 62-36. Congressional actions appear to be nothing more than political gesturing. The decision to approve or reject the pipeline is that of a recommendation by the Department of State and, finally, that of the President.

However, the conservatives’ hatred of American workers became apparent in an amendment to the Senate bill. That amendment, submitted by Sen. Al Franken (D-Minn.) would require, if the pipeline was approved, all iron, steel, and other materials used must be made in America by American companies. That would, at least, give some work to Americans. That amendment should have had widespread approval in the Senate, especially from the conservative wing that thrusts out its chests and daily proclaim themselves to be patriots of the highest order.

But when the votes were counted, the Senate, by a 53-46 vote, rejected that amendment. Voting for “Made in America” were 44 Democrats, one independent, and one Republican. Voting against the amendment were 53 Republicans.

The Republicans’ rejection of the amendment was expected. America’s corporate business leaders, most of them conservatives and registered Republicans, have freely downsized their workforce, outsourced jobs overseas, and proudly proclaimed their actions helped raise profits. Profits, of course, are not usually shared with the workers who make the product and then were terminated so American companies could use and exploit foreign labor, while the executives enjoy seven- and eight-figure salaries, benefits, and “golden parachute” retirement clauses not available to those whose labor built the companies and their profits.

Corporations have also figured out how to best send their profits to banks outside the United States and, thus, avoid paying their fair share of taxes. Several Fortune 500 corporations, with billions of dollars in assets, pay no federal taxes. For money they keep in U.S. financial institutions, corporations have figured out numerous ways to use loopholes to bring their tax burden to a percentage lower than what the average worker might pay each year.

Congress is a willing co-conspirator because it has numerous times refused to close loopholes that allow millionaires and the corporations to easily drive through those loopholes, while penalizing lower- and middle-class Americans.

By their own actions-in business and, most certainly, in how they dealt with the Keystone XL amendment-the nation’s conservatives have proven that “Made in America” and “American Pride” are nothing more than just popular slogans.

[Dr. Brasch, an award-winning journalist and proud member of several unions, is the author of 20 books. The latest book is Fracking Pennsylvania, an in-depth look at the economic, political, environmental, and health effects of horizontal fracturing in the United States.]

 

Three New Tax Breaks Will Cost PA Schools and Services

By Chris Lilienthal, Third and State

After making deep cuts to schools, early childhood education, and health and human services, Pennsylvania lawmakers are now considering new tax breaks that will largely benefit a small number of higher-income earners.

Last week, the Senate Finance Committee approved legislation that would create a new loophole in the state inheritance tax. It allows business owners to bequeath business assets tax-free to their heirs – an advantage unavailable to most hardworking Pennsylvanians who inherit a family home or car.

Over in the House, the Finance Committee voted 18-16 on Wednesday to approve a bill that would exempt sales tax on the purchase of private and corporate aircraft, jet parts, and aircraft maintenance and repair. A car or truck purchase will still be subject to sales tax, but those in the market for a private jet will get a tax break. 

Finally, the House Commerce Committee is voting today on legislation that would reward investors in Pennsylvania start-up companies with a new tax credit that they can take even if they owe no state taxes. To qualify for the credit, the investor must have a net worth of $1 million or income above $200,000 a year.

Each bill, estimated to cost millions annually, could come up for votes before the House and Senate in the coming weeks. The Pennsylvania Budget and Policy Center has more on all three bills here.

These bills come on top of Governor Corbett’s proposal to enact a new round of tax cuts beginning in 2015 that will ultimately cost hundreds of millions from the state treasury and put profitable corporations first in line when future budgets are negotiated. It would be the latest in a series of costly special tax breaks over the decade that have undermined Pennsylvania’s ability to invest in schools and other vital services.

Pennsylvania can continue to fund special tax breaks like these or we can invest again in our children and our economic future – but increasingly we can’t do both. Unaccountable tax cuts undermine success in the classroom and growth in our communities, and they shift costs onto school districts, local governments, and property taxpayers.

Pennsylvania needs real tax reform that closes loopholes, ends special tax breaks, and levels the playing field for everyone. Only then can we enact a state budget that returns to tried-and-true investments in education and the services that promote long-term economic growth.

State Tax Cuts Take a Bite Out of Pennsylvania’s Budget Pie

By Chris Lilienthal, Third and State

State Tax Cuts Take a Bigger Bite of Budget Pie

Advocates delivered half a pie to every Pennsylvania legislator Tuesday. Why half a pie?

To remind them that a decade of large tax cuts for businesses has left schools, health care services, and local communities with a smaller share of the state budget pie.

Tax cuts enacted since 1999 have drained close to $3 billion this year alone from state coffers. The cost of the tax cuts has more than tripled since 2002, with little to show for it. Too often, these tax cuts are put in place with very little accountability or obligation for companies to create jobs. In fact, Pennsylvania ranked 27th in job growth in 1999-2000 but fell to 34th in 2011-12.

Budget cuts fueled by large business tax cuts also pass the buck to school districts and local governments – and onto local taxpayers.

Governor Corbett is now proposing a new round of tax cuts for 2015 and beyond that will cost as much as an additional $1 billion. The proposal includes no plan to close tax loopholes that allow companies to hide profits and avoid paying their share of taxes. 

Pennsylvania needs a budget that returns to tried-and-true investments in education and the public infrastructure that promotes long-term economic growth. After a long economic downturn, that is the path to more jobs, stronger communities, and a brighter future for our children. 

We can fund corporate tax cuts or we can fund our children’s schools, but increasingly we can’t do both. Giving larger slices of the pie to profitable corporations means less money in the classroom, fewer early childhood programs, and less support for local services. 

Pennsylvania needs real tax reform that levels the playing field for businesses that play by the rules, and stops giving away dollars that are essential to helping our children and families succeed. Only then will we be able to invest in a world-class public education and the community assets that build a stronger economy.

A Decade of Deep Cuts in PA. Don’t Let It Happen.

( – promoted by John Morgan)

Deep state cuts have already put health care at risk for kids and denied help to families struggling in this economy. They have put thousands out of work in schools, colleges, nursing care facilities and hospitals.

Think that’s bad? You ain’t seen nothing yet.

The Pennsylvania House may vote as soon as next week on a bill that will cut corporate taxes by close to a billion dollars by the end of the decade. More cuts to schools and health care will be next.

House Bill 2150 would close some corporate tax loopholes in Pennsylvania, but it is paired with big tax breaks for businesses. Even after counting new revenue from closing loopholes, this bill is a big money loser for the commonwealth.

The Pennsylvania Budget and Policy Center and Better Choices for Pennsylvania has an Action Page where you can send a message to your House lawmaker to reject this bill as is and to take steps to close tax loopholes more responsibly. Closing loopholes should not come at the price of budget deficits for years to come.

We’ve all seen the state budget headlines in recent months. 88,000 kids have had their public health coverage cut off. 14,000 Pennsylvanians have lost their jobs in schools and colleges. College tuition is rising, and help for families struggling in this economy is harder to come by.

Closing corporate tax loopholes could help Pennsylvania turn things around, but not if lawmakers pair it with business tax cuts that will cost us now and for years to come.

PA Tax Loophole Bill a First Step, More to Be Done

(This bill would close the “Delaware Loophole.” – promoted by John Morgan)

A blog post by Chris Lilienthal, originally published at Third and State.

Pennsylvania Representatives Dave Reed and Eugene DePasquale rolled out legislation today that would take an important first step towards closing corporate tax loopholes in Pennsylvania.

Corporate tax loopholes have been a problem for a long time in Pennsylvania. They don’t create jobs but do drain needed resources from good schools, health care and infrastructure.

Representatives Reed, a Republican, and DePasquale, a Democrat, deserve credit for recognizing this is a problem and taking steps to address it.

The bill, however, takes a limited approach and leaves many loopholes open for companies to exploit. It should be strengthened to ensure that big profitable corporations cannot use other artificial means to shift profits out of state and dodge taxes.

Matthew Gardner of Citizens for Tax Justice tells Philadelphia Inquirer columnist Joe DiStefano that combined reporting would be a better approach to closing loopholes. Under combined reporting, corporate net income tax would be assessed against income earned in Pennsylvania from a parent company and all of its related businesses.

As Gardner says:

Even if you’re successful in closing one [loophole], you’re doing nothing to stop the emergence of additional loopholes. Combined reporting ends the Whack-a-Mole game by taking away the incentive for companies to artificially shift income from one state to another.

Pennsylvania businesses are at a competitive disadvantage when multistate corporations are able to game the tax system. The Reed/DePasquale bill takes a step toward leveling the playing field for all businesses in the commonwealth, but more needs to be done.

Corporate Tax Dodging in the 50 States

A blog post by Chris Lilienthal, originally published at Third and State.

Far too many of the largest corporations have come up with ways to avoid paying taxes on billions of dollars in profits each year. A new report on state corporate tax-dodging finds that 265 of the nation’s largest corporations paid state corporate income taxes on only about a half of $1.33 trillion in profits between 2008 and 2010. That amounts to nearly $43 billion in state income tax avoidance over the three years!

The report doesn’t identify state-specific tax payments since the companies don’t disclose their profits and taxes on a state-by-state basis. It only reports total state corporate tax payments made.

Of the 265 Fortune 500 companies examined, 68 paid no state corporate income tax in at least one of the last three years and 20 averaged a tax rate of zero or less during the 2008-2010 period. Among the companies paying no net state income tax over the full three-year period were DuPont, Goodrich, International Paper, and Intel.

Of the 14 corporations headquartered in Pennsylvania that were examined in the report, H.J. Heinz, Air Products & Chemicals, and Comcast paid no state corporate income tax in at least one of the last three years. Among the Pennsylvania companies, H.J. Heinz averaged the lowest tax rate over the 2008-2010 period (at less than 1%), while PNC Financial Services Group, Airgas, and Air Products & Chemicals averaged three-year tax rates of less than 2%. On the other end of the spectrum among the Pennsylvania corporations, Universal Health Services averaged a three-year tax rate of 4.9%, while UGI and Dick’s Sporting Goods averaged three-year rates of 5.3%.

The report comes at a pivotal time. As The New York Times notes:

This year, there has been a great deal of discussion about whether corporations are paying their fair share of federal taxes. But the issue resonates at the state level as well, where corporate taxes have long been a shrinking share of state revenues. While corporate income taxes made up 9.7 percent of state revenues in 1980, according to the Nelson A. Rockefeller Institute of Government, they now make up only an estimated 5.7 percent. {See the graphic above.}

In Pennsylvania, state corporate taxes as a share of state revenues went from 11.9% in 1980 to 5.8% in 2009, according to U.S. Census data.

For the past three years, states have made recession-driven cuts to public schools, colleges, and health care for children and families. Pennsylvania has cut $860 million from public schools and reduced funding for colleges by 18%. Had all corporations paid their fair share, Pennsylvania could have avoided many of these cuts.

Third and State This Week: Closing Loopholes, a Flawed School Vouchers Plan and More

This week, we blogged about closing tax loopholes on Tax Day, a deeply flawed school vouchers plan in the state Senate, Governor Corbett’s claims about property taxes in Texas, and much more.

IN CASE YOU MISSED IT:

  • On education, Steve Herzenberg wrote that despite amendments made to the Senate school voucher bill, it remains a deeply flawed and expensive new program, with little to no accountability.
  • On state budget and taxes, Sharon Ward shared her Tax Day op-ed in the Pittsburgh Post-Gazette, where she suggests that instead of grumbling about taxes this year, we start the work of closing tax loopholes that disproportionately benefit the well-connected few. Meanwhile, Chris Lilienthal passed on Tax Day resources from the Center on Budget and Policy Priorities and Demos’ Taxes Matter Project to provide a fresh perspective on how we think about taxes. And Michael Wood posted a video clip from a Monday press conference, hosted by Common Cause Pennsylvania, where he and good government advocates called on lawmakers to close tax loopholes before cutting schools, colleges and services for vulnerable Pennsylvanians.
  • Finally, on the Marcellus Shale, Michael Wood sets the record straight on what taxes Texas drillers do and don’t pay, in response to recent comments by Governor Corbett.

More blog posts next week. Keep us bookmarked and join the conversation!

‘Close the Tax Loopholes’ Day

Today is Tax Day, but perhaps we should rename it “Close the Tax Loopholes Day.” That is the message delivered by Sharon Ward, Director of the Pennsylvania Budget and Policy Center, in an op-ed in Friday’s edition of The Pittsburgh Post Gazette. Here’s a highlight:

Many Pennsylvanians will grumble this week as they race to file their tax returns on time. Others will be laughing all the way to the bank.

Take General Electric, the nation’s largest corporation. You would expect G.E. to have a pretty sizeable tax bill, right? Think again.

Despite worldwide profits of $14.2 billion (including $5.1 billion in U.S. profits), G.E. owed Uncle Sam nothing in federal taxes. In fact, the company got $3.2 billion back in tax benefits.

At a time when Washington is cutting a wide array of critical services – from food for nursing women and infants to heating assistance for seniors – policy makers continue to look the other way when it comes to tax loopholes.

These loopholes allow corporations to shift foreign profits into accounts in Ireland, the Netherlands and Bermuda to avoid U.S. corporate taxes. These gimmicks are so well known they have nicknames – the Double Irish and the Dutch Sandwich – and they have a huge cost, as much as $90 billion a year.

The giveaways are alive and well in Pennsylvania’s antiquated tax system, too.

If your family earned more than $33,000 this year, congratulations! You paid more in income taxes than 85 percent of Pennsylvania corporations. Seventy-four percent of Pennsylvania corporations did not pay one dime in income taxes.

Read the full op-ed.