Nel's New Day

August 4, 2012

Why Superrich Need Federal Government

Filed under: Uncategorized — trp2011 @ 7:17 PM
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“When we succeed, we succeed because of our individual initiative but also because we do things together.” That was the point of President Obama’s statements about the importance of the infrastructure to business achievement. Mitt Romney took one sentence out of context and tried to persuade voters that the president told them that people didn’t really build their own businesses. Ironically enough, Romney had told Olympic athletes a decade ago that their success was built on the help from many others. Romney, however, has a very selective–and bad–memory.

Conservatives need to be told time and again that without the federal government support for the infrastructure that the country would have no successful businesses. Because of the publicly supported communications infrastructure, the richest 10% of Americans manipulate their 80% share of the stock market. The FAA, TSA, Coast Guard, and Department of Transportation safeguard the roads, seaports, and airports that ship corporations’ products. A nationwide energy grid powers their factories, and communications towers and satellites conduct their online business. While private jets use 16 percent of air traffic control resources, their owners pay only 3% of the bill.

But the wealthy get federal government support from more than just the physical infrastructure.

Security: In People’s History, Howard Zinn describes the way that mobs destroyed the houses of wealthy people in 1765 as “a war of plunder, of general levelling and taking away the distinction of rich and poor,” according to a report by colonial officials. Now the wealthy live in gated communities with personal surveillance drones. But their security is helped by the $55 billion that the U.S. government will spend on Homeland Security during the next year. There’s also help from another $673 billion for the military. And together, police, emergency services, and the National Guard train to prevent crimes against the wealthy.

Laws and Deregulations: The wealthiest people benefit most from the government’s tax laws, property rights zoning rules, patent and copyright provisions, trade pacts, antitrust legislation, and contract legislations. Added to that are the $1 trillion from tax loopholes permitting them to stash their fortunes out of the country. SBA and SEC guidelines also benefit large corporations that favor business while FDA and USDA quality control measures protect them from many consumer complaints and product recalls. Financial industry executives who scream against deregulation ignore the way they benefit from the repeal of the Glass-Steagall Act. Allowing the  investment and banking institutions to merge let the wealthy fleece the rest of the people. Trade agreements like NAFTA, with international disputes resolved by the business-friendly World Bank, International Monetary Fund, and World Trade Organization, support multinational corporations, and U.S. laws protect them from foreign infringement. Antitrust measures, such as the licensing rules that allow the American Medical Association to restrict the number of doctors in the U.S., keep salaries artificially high.

Research: Corporations focus on short-term profits while they use long-term research conducted largely with government money, especially in the tech industry. Companies like Apple, Google, Microsoft, Oracle and Cisco profited from the fastest-growing product revolution in American history as the U.S. government provided half the research funds well into the 1980s. Even 60% of university research is currently government-supported. Chemists, physicists, chip designers, programmers, engineers, production line workers, market analysts, and testers for the tech world are largely trained in public schools.

Subsidies: While over 90% of Temporary Assistance for Needy Families (TANF) goes to the elderly, the disabled, or working households, most of the annual $1.3 trillion in “tax expenditures” (tax subsidies from special deductions, exemptions, exclusions, credits, and loopholes) goes to the top quintile of taxpayers. One estimate is $250 billion a year just to the richest 1%. According to the website of  Sen. Tom Coburn (R-OK), mortgage interest and rental expense deductions alone return almost $100 billion a year to millionaires. The more profitable the corporation, the bigger the subsidies. Even the conservative Cato Institute admitted that the U.S. government paid $92 billion to corporate welfare during fiscal year 2006 to such companies as Boeing, Xerox, IBM, Motorola, Dow Chemical, and General Electric. The Federal Reserve provided more than $16 trillion in financial assistance to financial institutions and corporations. According to Citizens for Tax Justice, 280 profitable Fortune 500 companies, which together paid only half of the maximum 35 percent corporate tax rate, received $223 billion in tax subsidies. Most of agriculture commodity program funding is provided to such agribusiness corporations as Archer Daniels Midland. Estimates of oil subsidies range from $10 to $50 billion per year.

Disaster Costs: Oil company spokespeople claim that their corporations pay taxes. Exxon paid 2 percent in federal taxes from 2008 to 2010, and Chevron, 4.8 percent. But these paltry taxes don’t even begin to cover the cleanups need because of oil spills. Fines are insignificant in terms of oil companies’ billions of dollars in profits while government costs run into the tens of billions of dollars. Another costly area for the country’s taxpayers is the finance industry. Bailout estimates from the Treasury and the Federal Reserve range from $3 trillion to $5 trillion. That sum would pay off both next year’s deficit and so-called “entitlement” costs. And all while each CEO in the finance world continues to rake in millions and millions of dollars in salaries and bonuses.

Patriotic Millionaires recently said, “Given the dire state of our economy, it is absurd that one-quarter of all millionaires pay a lower tax rate than millions of working, middle-class American families… Please do the right thing for our country. Raise our taxes.” Republicans, stop the whining. You’ve already got almost the entire pie.

Thanks to Paul Buchheit for the above information. Buchheit is on the faculty of DePaul University and the Chicago City Colleges and the founders of Global Initiative Chicago (GIChicago.org), and fightingpoverty.org. He is also the editor and main contributor to American Wars: Illusions and Realities (Clarity Press).

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