President Obama said Thursday that the widespread and growing protests against Wall Street are an expression of the frustration people feel about the way the country’s financial system works.
That’s part of it, but it is much, much bigger than that.
People are also fed up with a political system that is dominated by the money and influence of Wall Street investment firms and huge multinational corporations interested only in increasing their profits as average Americans scape and claw to pay their bills and hold on to their jobs, if they are lucky enough to have one.
It is not hard to find evidence in Raleigh and Washington that the people are right. They ought to be fed up.
The N.C. Budget and Tax Center reported earlier this week that corporate interests want to make recent changes in state tax law that allow multinational corporations to hide their profits retroactive.
That would cost the state $400 million at a time when budget cuts made by the state lawmakers have devastated education and human services and costs thousands of workers their jobs.
Many companies use accounting maneuvers to shift profits made in North Carolina to subsidiaries in states that have no state corporate income tax, thereby avoiding their obligation to North Carolina.
Several states have caught on to the scheme and now require the companies to use combined reporting, a mechanism that makes it much more difficult for them to avoid paying taxes on the profits they make in a particular state.
North Carolina lawmakers for years have refused to adopt that simple concept of tax fairness that levels the playing field for North Carolina- based businesses that don’t have access to the loophole.
This year the Republican General Assembly not only refused again to make multinational corporations pay the state taxes they owe, they passed legislation making harder for Department of Revenue officials to recover taxes from individual corporations who are blatantly cooking their books to avoid paying the taxes that North Carolina companies pay.
But that was apparently not enough for the giant corporations. It is never enough. The BTC report looks at the effort to make this year’s changes retroactive, which would absolve the corporations from paying the taxes they tried to avoid in previous years.
Meanwhile in Washington Thursday, North Carolina Senator Kay Hagan joined with Senator John McCain to introduce legislation that would give multinational corporations a tax holiday on their overseas profits they bring back to the United States.
The claim by Senator Hagan and the battalion of corporate lobbyists is that this huge tax break still stimulate new investments that will create jobs.
But we have tried it before. The multinationals received a “repatriation tax holiday” in 2004 and studies showed that the corporations used most of the money to buy their own stock back and and give stockholders bigger dividends.
And as the Center on Budget and Policy Priorities ands other have pointed out, it rewards the companies that have been the most aggressive in sheltering their income overseas to avoid taxes.
And it gives the corporations the incentive to be more aggressive about it and wait for the next holiday to being the profits home. The break in 2004 was supposed to a one-time occurrence.
It also brings to mind the arguments against the bank bailout, that big banks have little incentive to behave responsibly if they know the government will not let them fail.
It appears that just as the major financial institutions are considered too big to fail, the multinational corporations have become too big to tax.