Wednesday, February 3, 2010

Forget Capital Gains: How About a Corporate Gains Tax?

Forget Capital Gains: How About a Corporate Gains Tax?

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During his State of the Union speech on Tuesday, the President called for reducing the capital gains tax on small businesses to the delight of many Republicans in the audience who recognize that this is a baby step toward eliminating the capital gains tax on big business, too.

Well, I propose the opposite. In light of the gargantuan, obscene profits Goldman Sachs, AIG, and banks made, why not inaugurate a similar program to the one in the UK here, and introduce a corporate gains tax? The U.K has been taxing profits made by companies since about 1965, and given the President's announcement today that reducing the deficit is as important as job creation, taxing corporate gains might be a way to accomplish both--reduce the deficit, and have capital to give the states for job expansion.

One has only to look at the mind boggling bonuses financial institutions in this country have given to their chief executives to see that, while it's not perfect, the math is certainly better than a miniscule tax to recover some TARP money. Bonuses Goldman Sachs, Bank of America, and others have paid their executives pale in comparison to the record profits oil companies have made since the U.S. invaded Iraq.

Reportedly, in 2002, worldwide profits of the five largest oil companies were $35 billion. But, in 2008 alone, Exxon Mobil posted the biggest annual profit in American history---$45 billion. The most profitable year for an oil company in Iraq produced $95 billion in revenue, according to Global Policy Forum and, over time, some estimates for oil profits in Iraq range anywhere from $600 billion to $9 trillion. A corporate gains tax of 15% on oil companies alone could make a substantial dent in the $1.4 trillion deficit.

But, the oil companies are a good place to start. Let's not end there. The idea is to reset the tax structure so that the highest taxation falls upon the biggest shoulders, those of the major corporations, and the wealthiest Americans.

All this means is that now that the Supreme Court has decided to blur the constitutional distinctions between personhood and banksterhood, why not extend that to the realm of taxation by holding corporations accountable for their profiteering in the same way we hold individuals responsible for the acquisition of assets?

And, what is recovered from the revenue generated by a corporate gains tax can go to subsidize affordable housing, end hunger, expand Medicaid and Medicare, and guarantee each and every American a living wage.

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