Friday, May 6, 2011
At a time when almost every state is experiencing some kind of budget crisis, resulting in lay-offs of teachers, police, fire-fighters, and reductions to student programs and services to the elderly and the disabled, Treasury Secretary Tim Geithner is preparing to unveil the Obama administration’s plan to lower the top corporate tax rate from the current 35 percent to as low as 26 percent.
Politico reports that Geithner has already begun meeting privately with CEOs, academics, labor unions, and liberal and conservative think tanks, and his aides say he is “encouraged by the response.”
Part of that optimism stems from the fact that Democrats and Republicans alike are allies of the business world.
One top business lobbyist, speaking on condition of anonymity, said corporate tax reform should be “the easiest piece” of a complex fiscal bargain “because you have people in both parties in the business community.”
The number of people who filed new applications for jobless benefits leaped 43,000 last week to 474,000, the highest level in almost nine months.
The surge in unemployment comes at a time when U.S. corporations are more profitable than ever. According to data from the Federal Bureau of Economic Analysis, corporations reported an annualized profit of $1.68 trillion in the fourth quarter of 2010.
In the first quarter of 2011, Exxon-Mobil, the world’s biggest and most profitable corporation, raked in $10.7 billion. That’s a 69 percent increase over the same quarter last year, and the highest quarterly profit since 2008. This comes at a time when Americans are searching underneath the couch cushions to scrape together enough change in order to fill their gas tanks so they can go file for unemployment benefits.
Exxon-Mobil uses offshore subsidiaries in the Caribbean to avoid paying taxes in the U.S. and paid zero U.S. income tax in 2009, while enjoying billions in American taxpayer-funded subsidies. Exxon-Mobil’s CEO enjoyed a compensation package of more than $29 million.
Meanwhile, as I reported yesterday, the Obama administration is preparing to announce plans to tax drivers based on miles driven. The draconian plan suggests that the vehicle miles traveled (VMT) tax would be tracked by installing electronic equipment on each car to determine how many miles were driven. Payment could take place electronically at filling stations.