US corporations have enough profit to grease the wheels of Washington DC to have legislation that benefits them, and their workers which are becoming fewer and fewer, are shouldering the tax burden, independent journalist Charlie McGrath told RT.
The Institute for Policy Studies and the Center for Effective Government issued a report on November 18 which revealed that seven of the 30 largest US corporations paid more money to their CEOs last year than they paid in US federal income taxes. The seven companies cited were Boeing Co, Ford Motor Co, Chevron Corp, Citigroup Inc, Verizon Communications Inc, JPMorgan Chase & Co and General Motors Co. The study says that CEOs at each of the listed companies were paid an average of $17.3 million.
RT: The recent findings show that seven big corporations not only paid their CEO’s more than they paid in taxes, but also had an effective tax rate of negative 2.5 percent. Does that mean that it’s not the companies who pay money to the government but the opposite?
Charlie McGrath: Yes, absolutely. These seven companies that were signaled out in the report from the Center for Effective Government showed exactly that these massive corporations have been very profitable. In fact, these corporations account for ten percent of the GDP in this country which is record high. But at the exact same time the employees that work for these companies have become a smaller and smaller part of the GDP. For example, Ford with $149.4 billion in revenue paid its CEO Alan Mulally $23.2 million, and at the same time the company paid even without this revenue, they got a $19 million tax refund. Yes, these powerful corporate interests, they have enough profit in order to grease the wheels of Washington DC to have legislation that benefits them, and their workers which are becoming fewer and fewer are shouldering the tax burden.
RT: How are these companies able to achieve these negative tax rates?
CM: It is pretty simple. You don’t need reading this report to understand that, all you have to do is to look at Washington DC. These massive corporations like the automobile companies, like these financial institutions, like Citigroup; they have become so powerful in this country because of this uneven playing field that they get to play on. With these profits they can go to Washington DC and fund politicians. So the politicians being on the right or on the left, Democrat or Republican, will go before the cameras and tell the people “We are working on your behalf.” But in reality we find them working on behalf of their special interests. And you see the results: these corporations do not pay their share of the tax burden. Their workers, like I said earlier, are becoming fewer and fewer. The workers are the ones who get to end up shouldering the tax burden. And it is provable. Just by reading a report like this, these corporations are not paying taxes in a lot of cases. If we try that, if the middle class tries that, we would be thrown in jail.
RT: How significant of a role did the lobbyists play in the current situation?
CM: Lobbies, lobby groups and actual CEO’s themselves going to Washington DC, these fundraisers that they are putting on for a $1,000 plate to reelect these politicians, it is a huge difference, and it is crony capitalism at its worst. It is not free market capitalism when the ultra-rich, the ultra-elite corporations have an uneven playing field. They don’t get to fail. We get to shoulder that the burden of their failure and they get to continue on amassing wealth, wealth that legitimately belongs to the people of this country. Their efforts to grease the wheels in Washington DC, their lobbying efforts, the fact that they are now considered to be too big to fail – this is a huge detriment to the people of the United States. We see what happens – the people suffer, these corporate special interests continue to flourish.
RT: So are these CEOs pocketing so much cash as payment for their lobbying activities?
CM: Yes, I am sure. This report comes out annually. In 2010 the average CEO that these several corporations were targeted in the report was about $16.7 million, fast-forward to now the same CEO positions were from $16.7 to $32 million. So this massive increase in just a few years in the amount of the compensation that the CEO’s are making… They are getting ultra-rich, super-rich. And yes, a lot of this money is ending up in the coffers of politicians in Washington DC, but there is plenty to go around at the top. They are certainly not in the middle or the bottom levels of the economic strata in this country but at the top. There is a plenty of money to go around to these guys. I’m not worried about Alan Mulally’s bank account. If he is spending a couple of million here or there in Washington DC in order to gain support, he still got plenty leftover, $20 million last year alone.
RT: How can the system which apparently has proved more profitable for corporations than society be changed?
CM: That is really a hard question. If we look at some of these corporations that are on this list, or we look at some of these big corporations, Citigroup, for example, they are on this list of one of the companies that pays less in taxes than it pays its CEO Michael Corbat, $17.6 million in compensation last year. That is huge amount of money for the CEO of an institution like Citigroup that would not be in existence today if it wasn’t for the taxpayers, the little people, in the US. Citigroup would not exist. If we would have let these corporations, if we would let these companies do what they want to do during any true capitalist system, they would have failed back in 2008-2009. And then a healthier company, maybe a company where CEOs are more interested in building a sustainable company, a company that employs people, expends not through paper assets, not through trading stock in their company, and not by firing workers in order to increase a bottom line – if we would have let the corporations like Citigroup fail and let healthy institutions come into their place – it would be a good start. Right now we have crony capitalism. So the institutions like Citigroup can never fail, it doesn’t matter how big of mistakes they make or how bad investments they sell. It just doesn’t matter because their failure will ultimately will end on the backs of the people and they will continue to amass profits. $70.6 million for Michael Corbat last year, the company got a $260 million tax refund because of special levers that they were given so they would invest in unprofitable businesses. Letting free market capitalism work would go a long way in fixing a lot of these problems. Unfortunately when we are talking about these institutions that are so behemoth we don’t let free market capitalism work, we treat them differently than we do small business in this country.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.