If Congress does not pass a proper budget in coming months, the next round of sequestration cuts takes effect in January. The second phase — $110 billion worth that could cost the nation 800,000 jobs — would be even more damaging than the first round. Here is a better idea: Everyone pays a fair share toward the nation’s shared expenses.
In West Virginia, for example, between 1990 and 2011, personal income taxes increased by 227 percent, and consumer sales taxes went up by 161 percent. At the same time, taxes paid by corporations dropped.
Even the often-cited U.S. corporate tax rate of 35 percent is misleading, because many of the most profitable corporations don’t pay their share — legally or not.
Instead of cutting important government functions that actually nurture future prosperity; the country should tackle its deficit with new revenue. And some of that revenue could come from closing tax law loopholes that are now used and abused. For example:
— Change the law that encourages companies to shift jobs to other shores, said Steve Wamhoff, legislative director of Citizens for Tax Justice. American companies are allowed a foreign tax credit — a credit for taxes they must pay in other countries. More problematic is allowing companies to defer paying taxes on offshore profits for years.
— End accounting tricks that make it appear profits are earned by subsidiaries in other countries, so they are not taxable in America. The IRS knows this is happening a couple ways, Wamhoff said in a recent conversation with the Gazette. One is that the profits American firms report to the IRS earned in Bermuda, for example, amount to 1,000 percent of Bermuda’s GDP.
— Tax excess profits from intangible property. A firm may send a patent to Bermuda and then tell the IRS the company has to pay a huge royalty to a Bermuda subsidiary for the patented idea. That fake cost of doing business lowers the company’s U.S. tax bill. The nation could collect another $23 billion by ending that practice.
No one wants taxes to rise, but the tax burden has been shifted to those who can least afford it for decades. It is time for a course correction.
Why should households and small businesses in West Virginia, or any state, get fleeced by these policies and then be harangued day and night to cut needed government functions to pay for it?
— Charleston (W.Va.) Gazette