4 Ways Corporations Owe
Us, Big Time—And How They Can Pay Us Back
Corporate greed has reached its limit. It
does not have to be this way.
By Paul Buchheit
March 30, 2015 "ICH"
- The distorted belief that
wealthy individuals and corporations are job
creators has led to sizeable business
subsidies and tax breaks. The biggest
giveaway is often overlooked: corporations
use our nation's plentiful resources,
largely at no cost, to build their profits.
There are several factual and
well-established reasons why corporations
owe a great debt to the nation that has made
them rich.
Our Tax Money Pays for Much of the
Research
The majority (57
percent) of basic research, the
essential startup work for products that
don't yet yield profits, is paid for by our
tax dollars. When ALL forms of research are
included -- basic, applied, and
developmental -- approximately 30
percentcomes from public money. In 2009 universities were
still receiving ten times more science &
engineering funding from government than
from industry.
All of our technology, securities trading,
medicine, infrastructure, and national
security have their roots in public research
and development. For a pageful of details
look here.
Even the business-minded The
Economist, with reference to Mariana
Mazzucato's book The
Entrepreneurial State, admits that "Ms
Mazzucato is right to argue that the state
has played a central role in producing
game-changing breakthroughs, and that its
contribution to the success of
technology-based businesses should not be
underestimated."
Fewer and Fewer People are Reaping
the Benefits of Our National Productivity
Corporate profits are at their highest
level in 85
years, doubling in the last
ten years, and growing by 171
percent in the first half of the Obama
presidency.
Despite a continuing growth in productivity in
the last 35 years, wages
have fallen dramatically, and technology
has begun to diminish
the need for warehouse workers, bank
tellers, cashiers, travel agents, and a host
of other middle-income positions. The
driverless car and robot delivery devices
are on the horizon. The
Economist opines again, this time in
worker-unfriendly terms: "Robots don’t
complain, or demand higher wages, or kill
themselves."
Robert Reich notes that much of the
photo processing once done by Kodak with
145,000 employees is now done by Instagram
with 13 employees. The messaging
application WhatsApp, recently purchased by
Facebook, has 55 employees serving 450
million customers.
Profit-taking has another insidious and
predatory side to it. Big firms use
intellectual property law (another gift from
the taxpayers) to snatch
up patents on any new money-making
products, no matter how much government- and
university-funded research went into it. An
example is genetically engineered insulin,
which due to patent protection cannot be
made generically, and as a result can cost a
patient up to $5,000 a year, about ten
times more than a patent-expired version.
Another example, as detailed by Sam
Pizzigati, is the cost of new cancer
drugs, which can reach $120,000 per year for
many patients.
Following the lead of the pharmaceutical
industry, Big Tech is now getting into the
act. By 2011 Apple and Google were spending
more on patent purchases and patent
lawsuits than on research and development.
Corporations Use Our Resources but
Avoid Their Taxes
Stunningly, over half of U.S. corporate
foreign profits are now being held in tax
havens, double the share of just twenty
years ago. Yet for some of our largest
corporations, according to the Wall
Street Journal, over 75 percent of the
cash owned by their foreign
subsidiaries remains in U.S. banks, "held in
U.S. dollars or parked in U.S. government
and corporate securities."
The nature and degree of tax avoidance by
some of our most resource-demanding
companies is nearly beyond belief. Apple,
which still does most of its product and research development
in the United States, moved $30
billion in profits to an Irish subsidiary
with no employees. Google, whose business
is based on
the Internet, the Digital Library
Initiative, and the geographical database of
the U.S. Census Bureau, has gained recognition as
one of the world's biggest tax
avoiders. Walgreens (which later backed
down), Burger King, and Medtronic are the biggest
names in the so-called inversions that
allow companies to desert
the country that made them successful.
Microsoft and Pfizer owe a combined $50
billion in taxes on profits being held
overseas. Much-admired Warren Buffett heads
a company (Berkshire
Hathaway) that made a $28 billion profit
last year, yet claimed a $395 million tax
refund.
Corporations Have Stopped Investing
in America
An Apple executive recently said,
"The U.S. has stopped producing people with
the skills we need."
But corporations are spending most of their
profits on themselves, rather than on
job-creating research and innovation. An
incredible 95
percent of S&P 500 profits were spent on
investor-enriching stock buybacks and
dividend payouts last year. In
1981, major corporations were spending
less than 3 percent of their combined net
income on buybacks. According to one
estimate, public U.S. corporations
have spent $6.9
trillion on stock buybacks in the past
ten years, about six times more than the
total student loan debt of $1.16
trillion.
Buybacks are not only a reflection of
corporate greed, but possibly also of
criminal behavior. Buying back stock was
considered a form of illegal
stock manipulation until the
Wall-Street-connected chairman of the SEC
made it 'legal' during the Reagan
administration.
A Progressive Solution: Dividends
for All
In his book, With
Liberty and Dividends For All, Peter
Barnes argues for a system of dividends to
all Americans for our co-owned national
wealth. Because corporations have used our
resources -- research, infrastructure,
environment, educational and legal systems
-- to develop technologies that are
gradually reducing the need for human
involvement, and because all of us have
contributed to our national productivity,
either directly or through our parents and
grandparents, we all deserve to benefit.
As Barnes states, "The sum of wealth created
by nature, our ancestors, and our economy as
a whole is what I here call co-owned wealth.
Some, including myself, have called
it shared wealth, the commons, or common
wealth. Whatever we call it, it's the goose
that lays almost all the eggs of private
wealth."
Precedent exists in the successful and
widely popular Alaska
Permanent Fund. With a nationwide
version of this Fund, all of us -- rich and
poor alike -- would receive a share of our
co-owned wealth, perhaps up to $5,000 per
year, according to Barnes. The revenue would
come from a carbon tax and/or a financial
speculation tax and/or a redirection of
corporate profits away from
executive-enriching stock
buybacks.
The dividend concept is fair, manageable,
and based on precedent. It's also good
business. The shrinking middle class will
have money to spend, and the money they
spend will end up as a new source of income
for the profit-hungry corporate world.
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