Thursday, September 29, 2011

Corporate Taxes–They cover the costs!

A quote by Elizabeth Warren has been going around the internet indicating that corporations should pay more taxes, because they benefit mainly from the infrastructure that they use to conduct their business.

There is nobody in this country who got rich on his own. Nobody. You built a factory out there — good for you!

But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea — God bless. Keep a big hunk of it.

But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

But don’t businesses already cover those costs?

Taking a look at the Federal Budget we can see that corporations paid the Federal government a shit load of money.

Corporation Taxes 2010 (in millions of dollars)
Income Taxes $191,437
Social Insurance* $432,407
Transportation Fuels $11,030
Transportation Trust Fund $34,992
Airport and airway Trust Fund $10,612
Inland Waterway $74
Tobacco $17,160
Tobacco Assessments Trust Fund $937


* 1/2 of Social Insurance Receipts  

Now I’ve included transportation costs in the number since they primarily are paid to the benefit of businesses. Whether it’s people going to work or visiting a place on vacation to frequent businesses that cater to tourists. There is also the fuel taxes to transport goods and services.

Now lets look at the expense side of the ledger.


2010 Budget Outlays
(in millions)

  Business Citizen Unsure
    050 National defense:      
        Discretionary:      $            714,179
        Mandatory:      $                7,130
    150 International affairs:      
        Discretionary:      $              57,028
        Mandatory:      $                3,567
    250 General science, space, and technology:      
        Discretionary:  $         30,996    
        Mandatory:  $                  91    
    270 Energy:      
        Discretionary:  $            3,714    
        Mandatory:  $            4,018    
    300 Natural resources and environment:      
        Discretionary:  $         36,768    
        Mandatory:  $            2,884    
    350 Agriculture:      
        Discretionary:  $            7,329    
        Mandatory:  $         12,518    
    370 Commerce and housing credit:      
        Discretionary:  $            7,398    
        Mandatory:  $     (126,390)    
    400 Transportation:      
        Discretionary:  $         29,014    
        Mandatory:  $         71,075    
    450 Community and regional development:      
        Discretionary:  $         21,347    
        Mandatory:  $             (244)    
    500 Education, training, employment, and social services:      
        Discretionary:  $         89,481    
        Mandatory:  $            5,674    
    550 Health:      
        Discretionary:  $         58,537    
        Mandatory:    $      347,675  
    570 Medicare:      
        Discretionary:  $            6,246    
        Mandatory:    $      446,372  
    600 Income security:      
        Discretionary:  $         65,680    
        Mandatory:    $      558,362  
    650 Social security:      
        Discretionary:  $            5,764    
        Mandatory:    $      701,065  
    700 Veterans benefits and services:      
        Discretionary:  $         53,274    
        Mandatory:  $         71,170    
    750 Administration of justice:      
        Discretionary:  $         51,976    
        Mandatory:  $            3,180    
    800 General government:      
        Discretionary:  $         18,838    
        Mandatory:  $            4,824    
    900 Net interest:      
        Mandatory:    $      196,193  
    920 Allowances:      
    950 Undistributed offsetting receipts:      
        Mandatory:      $            (82,116)
    Totals  $       535,162  $  2,249,667  $            699,788

As we can see from the breakdown, the costs of the benefits to the corporation to conduct business is around $535,162 million. Now I’ve probably kept some costs in the Business side that belongs in the Citizen side and the defense budget can be argued either way. But in her quote she doesn’t include national defense, so I excluded it and put in the unsure total. Also the profit from TARP maybe should be excluded from the number. Even if we do that business is really close to covering all of the benefits.

Now these are just Federal numbers and don’t include expenditures on the state and local level. But I do think these numbers are reflective of what you would find on those levels also. So Elizabeth Warren’s quote sounds great on the surface, but once we look at the underlying numbers we can see that businesses pay their fair share to the government to cover the benefits they receive.

Take a look at the Citizen column, does something look out of whack there? I’ll cover that in a future post.

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