Hoping for some equity in taxes
Published 11:53 pm Saturday, November 23, 2013
By Maria Fornella
Paying back taxes is one of the requirements for undocumented workers hoping to join the “pathway to citizenship” included in the immigration reform passed this summer by the U.S. Senate.
That won’t stop any of the immigrants I’ve worked with from pursuing their dream of joining the mainstream of society. Many already have payroll and income taxes withheld from their paychecks; some pay taxes voluntarily as independent contractors. They recognize that taxes help pay for everything they love about America.
If only American corporations were all as patriotic. Despite complaints that corporate taxes are too high, corporations on average pay only a third of the official federal income tax rate, according to a recent study by the U.S. Government Accountability Office. As a result, the slice of total federal revenue coming from the corporate income tax is at its lowest level since the 1950s, the U.S. Office of Management and Budget tells us.
How do huge corporations manage to dodge so much of their tax responsibility? Unlike Main Street businesses and domestic manufacturers, multinational firms can play an international shell game with their profits, sheltering cash in dummy corporations they establish in foreign tax havens.
Apple Inc., one of the world’s most valuable companies, is also one of the most ingenious tax avoiders. A recent Senate committee investigation discovered that the tech giant had paid practically no taxes on $74 billion earned between 2009 and 2012 and stashed away in low-tax Ireland.
Many other familiar members of the corporate community are equally adept at sidestepping their tax duty. General Electric, Wells Fargo, Verizon and Boeing are among those that have paid no federal income tax at all in one or more of the past five years, according to an independent monitoring group.
What many recent immigrants to this country seem to understand, and many big corporations don’t, is that when all parts of the community fail to pull their weight, society suffers. A good example has been in the news recently: college loans are only kept affordable to middle-class kids through federal subsidies. I’ve lost promising students with bright futures from my classroom because they couldn’t afford tuition.
Meanwhile, younger kids are being dropped from Head Start, and the homebound elderly are going without Meals on Wheels because of the across-the-board federal budget cuts knows as the “sequester.” These disinvestments in our people can be traced back to the tax avoidance schemes of big corporations and wealthy households.
Unfortunately, more budget cuts are on the way if corporate lobbyists succeed in writing international tax dodging into our tax code by creating a “territorial” tax system. This would create a permanent tax amnesty on all profits that U.S. corporations claim to make overseas.
This will provide even more incentives than exist today for multinational companies to use accounting gimmicks to shift profits to tax havens where they pay little or no taxes. And if companies actually did set up operations offshore, that would be a further drain on good jobs in this country. Either way, the middle class loses.
One of the reasons I work to integrate recent immigrants into our society is that I’m one myself, as is my husband. We are proud to be U.S. citizens, but also proud of the nation of our birth, Uruguay, which like the United States was built on a thriving middle class.
But in tiny Uruguay, college students don’t have to worry about the cost of tuition or student loans, because higher education is viewed as a social investment and is provided at public expense. We both got our undergraduate degrees in Uruguay and have had successful academic careers here.
The United States — my beloved, adopted nation — needs to start investing again in all the things that made it great, from highways to higher education to Head Start. And we can only do that when corporations and wealthy individuals are once again paying their fair share of taxes.
Maria Fornella, a lecturer of political science and geography at Old Dominion University, is a volunteer advocate for immigration reform. Email her at mfornell@odu.edu.