HP: Protectionism won't save Europe's jobs

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Socially acceptable and the almighty corporate dollar.

As most of the folks here will attest, I am very much a pro business sort of fellow. But even someone like me has to draw a line at some point between making a buck and being a good steward of our future. As an example I wouldn't allow my employees to simply dump the by products of manufacturing circuit boards out back in the creek. Not because the law says I can't, but because it's the wrong thing to do and my children and grand children have to live on this planet. Simply put, along with the opportunity to make money comes certain responsibilities.

For the most part, smaller businesses tend to grasp this concept of responsibility to their employees and communities because they are deeply involved with both. The people they must deal with are human beings and not just a parole number on a ledger sheet.

As one looks back over the expansion and growth of the corporate entity (a legal construct) in size it's easy to see the transition of employees from human beings to numbers on the ledger and an attitude of replacement based solely on costs and savings.

To put it another way, the corporate entity has been excused from the responsibilities we expect from a human being dealing with other humans. This isn't just about hiring the cheapest possible labor, it includes such things as national pride, paying taxes for the betterment of the community, flagrantly breaking both the law and the trust between "the company" and all they are supposed to serve.

As an example, my company has roughly 50 to 60 employees depending upon what we have going on. It's a small company by just about anyone's definition. And yet, my company paid a MUCH higher tax rate than did Microsoft or IBM. I know that's hard to believe but it is the truth. In some cases I actually paid more dollars into taxes than some of the largest and most profitable companies in the US. Take a look at these numbers.

From 1996 through 2000, just ten large profitable companies enjoyed a total of $50 billion in corporate tax breaks. That brought their combined tax bills down to only 8.9 percent of their $191 billion in U.S. profits over the five years. In just the most recent two years for which data are available, these ten companies got $29 billion in tax welfare, and paid a mere 5.9 percent of their profits in federal income taxes.

Microsoft enjoyed more than $12 billion in total tax breaks over the past five years. In fact, Microsoft actually paid no tax at all in 1999, despite $12.3 billion in reported U.S. profits. Microsoft?s tax rate for the past two years was only 1.8 percent on $21.9 billion in pretax U.S. profits.

General Electric, America?s most profitable corporation, reported $50.8 billion in U.S. profits over the past five years, but paid only 11.5 percent of that in federal income taxes. That low tax rate reflected almost $12 billion in corporate tax welfare for GE.

Ford enjoyed $9.1 billion in corporate tax welfare over the past five years. It reported $18.6 billion in U.S. profits over the past two years, but paid a tax rate of only 5.7 percent.

Worldcom paid no taxes at all in two of the last three years, despite reported U.S. profits of $15.2 billion. Worldcom?s total tax rate over the three years was only 1.6%. Corporate tax welfare slashed Worldcom?s tax bill by $5.3 billion over the past five years.

IBM reported $5.7 billion in U.S. profits in 2000, but paid only 3.4 percent of that in federal income taxes. In 1997, IBM reported $3.1 billion in U.S. profits, and instead of paying taxes, got an outright tax rebate. Over the past five years, IBM enjoyed a total of $4.7 billion in corporate tax welfare.

General Motors paid no taxes at all in three of the last five years, despite $12.5 billion in reported U.S. profits. GM?s tax rate for the past three years was negative 1.3 percent. Its corporate tax welfare totaled $3.6 billion over the past five years.

Enron paid no income taxes at all in four of the past five years, despite $1.8 billion in reported U.S. profits. Enron?s total taxes over the five years were a negative $381 million. Its corporate tax welfare totaled $1.0 billion.

El Paso Energy reported $1.6 billion in U.S. profits over the past five years, but paid less than nothing in federal income taxes, getting tax rebates of $254 million. El Paso?s tax rate over the five years was negative 15.5 percent. Its corporate welfare totaled $827 million.

Colgate-Palmolive paid no taxes at all in three of the past five years, despite $1.6 billion in reported U.S. profits. Colgate?s total tax rate over the five years was negative 1.3 percent, due to $595 million in corporate tax welfare.

Navistar, on $1.4 billion in U.S. profits over the past five years, paid only $28 million in federal income taxes, a tax rate of only 2 percent. Navistar?s corporate tax welfare totaled $451 million.

All of this was accomplished by these corporate entities convincing (campaign contributions) Congress they needed these breaks to be "competitive". After all, if they didn't get these breaks then upper management wouldn't be able to take millions of dollars in bonuses every year. (We won't even go into the fact that a number of these same corporations have broken every law they think they can/have gotten away with.)

So here we are again with the same song and dance around the word "competitive". These same corporations are now telling everyone they must do this to remain "competitive" and they have no choice. It's "inevitable". The result is that the corporations have a HUGE advantage because they do not pay taxes like a small business or the people working for them, they hire people that pay ZERO income taxes (India IT workers pay no income tax when they produce products for export.) and they pay ZERO taxes on any investments they make in those countries.

Of course they then say we need to be more competitive and to accept the inevitable! You folks need to retrain (no one has said to what) and move to the next technology. (what ever that is) As if anyone can be "competitive" with a 20% to 30% handicap in the bottom line due to taxes.

How can I compete with IBM making 3.1 billion dollars PROFIT and they get a tax rebate and I am paying in 20% to 30% of my companies gross income every year? How can I compete against another company that doesn't pay a penny into employees income taxes and hires them at 1/3 the cost I do?

I know that I keep saying it but the truth is that I LOVE competition in the market and will compete with anyone if there are a set of rules to the completion that we must all follow. However tying my hands behind my back, and making me wear 100 lb shoes pretty much assures that the "competition" is anything but fair and the outcome is as the author said, "inevitable"...

Posted by: No_Ax_to_Grind   Posted on: 01/23/04 You are currently: a Guest | Members login | Terms of Use

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