Tax Time – Who Pays and Who Profits?

Tax Time – Who Pays and Who Profits?

Every April we sit down to pay our taxes, calculating the amount of our monthly earnings which have already been drained, or worse, discovering we owe money. But not everyone faces this burden. Those of us in the working class pay a disproportionate amount of taxes compared to the wealthy, and some of the wealthiest corporations pay no taxes at all! In other words, we pay, but they take home all their profits.

The tax system is a maze of laws and loopholes. It’s simple enough to just pay the standard amount, but in order to save, we have to claim deductions, itemize them, keep records of everything. And what if you have two or three jobs? With all the different tax forms to fill out no wonder people get headaches around tax time?

What do the wealthy do? They employ dozens of financial experts and manipulators to hide their money, minimize their costs and make sure they pay as little as possible. Households earning more than $10 million per year pay 19 percent in taxes, while households making $55,000 per year will pay 27 percent of their income.

The rules are even more unfair when you look at how corporations are taxed. Corporations are supposed to pay an average of 35 percent taxes on their profits. But after the lawyers and financial experts go to work, the average Fortune 500 company only pays 12.6 percent in taxes. In fact, the richest 280 companies only paid 4.6 percent and 26 companies managed to pay minus seven percent – the government paid them!

How do the corporations do this? They move their money around to avoid paying. For example, JP Morgan Chase has 50 subsidiary companies based in tax havens like Bermuda and the Bahamas. Companies park their money in offshore accounts and keep it off the books. Then when it comes to tax time they pretend to pay their “fair share” which is really a fraction of their wealth. Corporations, banks and wealthy individuals are sitting on around 21 trillion dollars in off-shore accounts around the world.

In other words, while workers are forced to pay almost a third of their earnings, the wealthy, the banks, and the corporations pay very little or sometimes nothing at all. In fact, for every dollar that the average tax payer pays, corporations only pay 22 cents.

It is even more shocking to see how the tax system has changed over time. Today’s tax rate on the wealthy of 35 percent is nothing compared to the 1970s when the wealthy were taxed at a rate of 71 percent. The millionaires and billionaires of the 1970s did not go hungry, or take their kids out of private school, or miss payments on their mansions. The rich have simply gotten richer. In 1970, the average CEO made 50 times as much as the average worker. Today the average CEO makes 300 times as much as the average worker. The changes in the tax system are no different than every other aspect of this society – exploitation has increased on the backs of the workers.

What are we paying for? The tax money that comes out of our pockets is hardly getting us the things we need. Education is a good example. Education is getting worse and worse as schools deteriorate and budgets are slashed. The result is an education system ranked #29 in the world. And higher education costs have shot up drastically, robbing working class students of a chance to go to college. The tax money clearly isn’t going to things like education. So where is it going?

In fact, 57 percent of the federal budget is spent on the military – an increase of five percent from last year. In other words more than half of the taxes which go to the federal government are spent on the world’s biggest killing machine – the U.S. military. Whose priorities does this reflect, except for the companies who profit by dominating the world.

Taxes are worse than just a headache, they are a symptom of the injustice of this society. By doing the work, workers are the ones who create all of the wealth. But we are robbed by the corporations when they profit off our work. And we are robbed again when taxes are collected, and used pay for a system that does not meet our needs. At tax time, we are the ones who pay, but they are the ones who profit.