H O W A R D S B E N D

Well, I never thought that these words would come from my mouth.  I might be banished from all the liberal websites and progressive blogs.  I might shunned by left-wing friends.  But, there is no denying that it is time to cut the federal corporate income tax to zero percent.

Historically, corporate federal income taxes would amount to almost 30% of federal revenue.  Last year, the federal government collected approximately $2.2 trillion and corporate income tax revenue amounted to about 6% of this total.  This is a whopping $130 billion.  When the likes of GE and Exxon pay no taxes and in fact receive a tax refund, something is wrong with the system and needs to be fixed.  There should be a better way to raise tax revenue that does not wreak of hypocrisy and does not tie up billions of dollars and thousands of hours seeking to avoid this necessary evil.

Although the US corporate tax rate is 35%, the average tax rate actually paid by a US corporation is in the mid-20% range due to a host of tax advantages offered to corporate entities.  For illustrative purposes, let’s say that a corporation earns $100 million before taxes.  With an average corporate of 25%, this would equate to $25 million in federal tax revenues.  However, if the federal government has a 0% corporate tax rate, the company would have $25 million of excess cash.  What are the options for this company with this excess cash in its coffers?  First, the company might use the excess cash to pay additional salaries and bonuses.  Or, the company might pay out additional dividends to its shareholders.  In both these instances, the lost federal revenues would come back to government in the form of the personal income tax for those receiving the additional funds.  The tax rate on dividends would have to be increase from the current level of 15% to 35% to keep the federal government revenue neutral.  The other choice for this corporation with $25 million, or some portion thereof, in its coffers would be to invest in its own growth through acquisition of capital equipment or the acquisition of another firm that might make it more competitive in the future.  Although this investment portion of the might represent a loss in direct federal revenues, the federal government might recoup lost revenue if the acquisition is from a domestic firm in which case the profits go to the employees and shareholders and again would be recouped from personal income taxes.  As this $100 million net company grows from this capital expenditure, the federal government would recoup more taxes from employees as salaries increase or from shareholders as dividends are increased as the company increases its profits.

There are many benefits to a zero percent corporate income tax rate.  First, it makes our US manufacturing firms more competitive with foreign manufacturers.  As companies have more cash in their coffers, they have more funds to invest and to increase their competitiveness in the global economy.  Second, the  0% tax rate might draw foreign manufacturers to our shores. Foreign multi-nationals look for competitive environment to locate new manufacturing.   a few years back, Ireland cut their corporate tax rate to 12% and a number of multi-nations moved their operations there.  A 0% rate would draw new manufacturing to the States creating jobs for US citizens and generating more tax revenue for the federal government.  Also, corporations spend billions of dollars and thousands of man-hours on tax avoidance whether through the tax lawyers and accountants that are hired or through the numerous tax havens they must create and maintain just to avoid taxes  One Fortune 500 company has over 200 off-shore tax havens to shelter income from the US federal government.  All this time and money lost would be eliminated with a 0% corporate tax rate freeing up additional funds to invest in the company’s growth.

And finally, one of the most active forms of lobbying efforts in Washington DC, is tax avoidance.  Corporations use their lobbyists to petition Congress for tax breaks for their industries or for certain projects.  The passing of new laws to include these new tax deductions or tax credits take-up a good portion of legislative time and energies.  In addition, this process perpetuates the “money” influence in Washington as receptive Congressmen are rewarded for their efforts with campaign contributions from their corporate benefactors all the time perpetuating the corporate influence over these legislatures.

In conclusion,  this is not a traditional “liberal” proposal.  As the federal deficit soars, the talk amongst “lefties” is to reduce the tax shelters for corporations to bring more revenues to the federal coffers.  This has not worked in the recent past and I do not believe that it will work in the immediate future. .  I believe that by eliminating corporate income taxes the government can earn the same amount of revenues.  A 0% corporate tax rate will allow corporations to become more competitive and will hopefully draw new multi-national manufacturing companies to the US and create more jobs here in the States.

Believe it or not, Scott Walker had me confused.  I knew the governor’s plan to cut public employees’ salaries and benefits was not about a budget shortfall since he recently signed into law a $130 million in tax breaks for corporations.  I could not fathom an elected official being against education which is one of the pillars of the American dream.

Of course, there is the popular argument that Republicans want to privatize education.  The  new”budget crises” would allow states to cut funds for education reducing public schools to babysitting facilities.  This would give momentum to private schools and school voucher programs where people are given vouchers to help offset the cost of tuition at the private schools.

But not everyone can afford a private education even with a state voucher.  The economically challenged public schools would fail to provide a quality education and fail to provide the skills and knowledge required to succeed in today’s high-tech world.  At that point, I realized that this is what these Republicans want.  The poor public educational system will produce under-skilled and uneducated graduates.  Poorly educated people will accept poorer working conditions and not look for advancement and of course accept lower wages with no benefits.   This is the same reason that Republicans do not support unemployment benefits for those out of work.  As the pool of unskilled graduates and unemployed workers without benefits grows the pool of cheap labor expands and wages drop and benefits are cut.  This is the the ideal pool of labor  for America as more and more of the skilled and highly qualified jobs are shipped to cheaper labor sources overseas.

One more lesson from Wisconsin  with the constant battle against the unions and their right to exist.  All of the sudden I realized the reason why several Republican governors have refused federal money for high-speed rail despite the fact that it will bring immediate jobs to the states as construction starts and will continue to provide jobs as the new high speed trains are operational.  Also, this rail should improve commerce and business in the area.  So why should a governor refuse these funds?  Scott Walker gave me the answer.  It is because the high-speed rail would most likely bring union jobs to the state.  The construction jobs would most likely be union jobs and the rail jobs would also most likely be union jobs.  As we learned from Mr. Walker and his supporter David Koch, unions are an anathema  to the Republican politicians and their ultra-rich supporters.  It is more important to keep unions out then bring jobs to a state with high unemployment.  This is not the state of Wisconsin, this is the state of the Union.

I think that we all can take away a few big lessons from the recent turmoil in Wisconsin – it is time to end public school education!

First, there is no fair way to pay for public education.  The system is rigged for those families with many children living in small homes or, even worse, renting apartments.  These families pay no or just a small amount of real estate taxes that are used to fund our schools.   Why should two families living side-by-side in identical homes pay the same real estate taxes when one family has five children and the other couple a single child?  Why should people with no children have to pay school taxes at all?  We need to find a more equitable system.

Second,  the hope and dreams that a quality education are suppose to provide are myths in today’s world of few job opportunities.   Today’s curriculum is burdensome and irrelevant for providing the skills and knowledge to succeed in the world of today.  We teach two years of pre-Algebra and then a year of Algebra I  followed by Algebra II.  I have yet to use the “x” and “y” to help solve a problem in the real world.  How about trigonometry?  We can sine that one to the dumpster, too.

And science education, where has that gotten us?  We produce a bunch of liberal scientists that take federal grant money only to try and convince us that there is global warming.  Or we pay scientists, again with federal and state grant money, to study the behavior of rats and monkeys and then try to educate our children with the theory of evolution.  Science got us to the moon and what did we get for those billions of dollars spent?   Tang.

History?  Forget about it.  We spend more time teaching American history in our schools than we do teaching Algebra.  American History is taught every year in grades 1 through 8, although much of that time focuses on Thanksgiving.  Our kids are taught social studies , whatever that is, in the ninth grade maybe one year of world history in tenth and then back to American history for the junior and senior years.  And what do we get for it?  We have politicians  who you would think would be experts on American history, and yet nationally recognized politicians stumble as they try to recall history to make a point.  John Boehner tells us he is reading the Constitution and then reads from the Declaration of Independence.  Michelle Bachman tells us that the Founding Fathers, led by John Quincy Adams (who we know was not a Founding Father) eliminated slavery.  Sarah Palin cannot recite a single decision handed down by the Supreme Court which she might disagree with.  I can bet that both these politicians got A’s in their history classes.

We, as a society, must move to a system of home schooling.  Only the parents really know what is essential for their children to learn and they can be responsible for passing along this knowledge.  We do not need elected school boards dictating that kids learn subjects that we see as totally irrelevant or contrary to our beliefs.  No one will tell us we cannot teach the Bible in our homes.  I can assure you there will be much fewer discipline problems with home schooling and we will not have to hire a police force to guard the doors of education.  Think of the savings on the federal school lunch program.  Of course, those families that are apathetic to their own childrens’ education can waste their hard-earned dollars sending their kids to private schools.  That is what we mean by ” free choice”.

By ridding ourselves of public education, we immediately go along way in solving the state and local budget problems. We immediately make education more relevant and give control back to our kids to the family.  And finally, we will not have to deal with the divisive teachers’ strike in our community every two years.