[Originally posted on the MaDemsForum on Oct. 1, 2011.]
In Sudbury, we’ve been trying to write a series of letters to the editor of the local paper focusing on public issues and particularly on Scott Brown’s record. One such letter (by Judy Deutsch) provoked a vituperative reply from one of our town Republicans. I responded in last week’s issue to just one point in that reply. I’m including my letter here, because I think the points are of continuing interest and importance, and worth making in other contexts as well.
To the Editor:
In her letter of September 8 replying to Judy Deutsch’s letter about Scott Brown, Susan Bistany states that “the corporations that stay here are taxed at one of the highest levels in the developed world…”. Let me address that point.
Corporate taxes are confusing: the basic corporate tax rate is indeed high. In practice, however, it is low, because of so many exceptions built into the law. A better measure is to look at corporate taxes as a share of the Gross Domestic Product. In 2009 it was 1.3%, far below the average rate for OECD countries (roughly, the “developed world”), which was 3.2% — the only country having lower proportional corporate tax revenue was Iceland.
The corporate tax rate is now at a historic low. It’s been steadily decreasing since about 1950, when the economy was expanding and expectations were rising. And while 50 years ago corporations paid 23% of federal taxes, now they pay about 7.2%. The reason given was always that these tax cuts would create more jobs. But they didn’t. The income gap just widened; essential government services took a hit.
So people pay the same as before, but see government services declining. This is then used to justify breaking up unions and firing and degrading the working conditions of teachers and other employees.
Here’s a quote — from Elizabeth Warren, not Scott Brown:
“There is nobody in this country who got rich on his own. Nobody. You built a factory out there — good for you.
“But … You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. …
“You built a factory and it turned into something terrific or a great idea — God bless! Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”
I can understand how some people might feel that slashing taxes for the extremely wealthy and for large corporations might benefit them personally.
What I cannot understand is how anyone could believe that this sort of policy could lead to a society we would want our children and grandchildren to live in.