Wednesday, April 23, 2008
How Long Can it Last?
I read a couple of statistics the other day:
1. Corporations pay only about 10% of all federal tax receipts. In 2003, they contributed only 7.4%! The rest comes from individuals.
2. Only 33% of the US Gross Domestic Product (GDP), the measure we use to determine the state of our economy, comes from corporations. The rest comes from individual's spending, quite a bit of it on products produced in places other than the United States.
How long can this continue? How long can our society function when the entities with the most money fail to contribute in proportion to what they take? It wasn't always this way, of course. In the supposed "golden age" of the 1950s corporations had a more patriotic attitude and did not set up offshore entities (just a post office box on an island in the Carribean) to avoid taxes. The government did not shower them with massive tax subsidies for moving jobs overseas. Corporations invested in manufacturing and research facilities here in the United States as opposed to overseas, thereby making a healthy contribution to our GDP and creating jobs. Beginning primarily in the 80s, they began investing much of their money in lower-cost locations - not in the United States, so other countries benefit.
The individual cannot sustain an economy and government that has grown so large. The people's capacity to carry debt will dry up at some point and the whole house of cards will come tumbling down.
We need corporations to pay their fair share - both in taxes and activity here in the United States. They incorporate here because the United States has stability, laws and an environment that allows them to make money and keep most of it. They are getting the benefits of this, without paying for it. Loopholes should be closed. Offshore entities that are an obvious tax dodge should not be allowed. Corporations should not get tax subsidies for investing outside of the country.
In addition, it's time they pick up their spending here in the US - recycle some of the profits here instead of overseas. The consumer cannot continue to provide 66% of the GDP of this nation by buying stuff produced elsewhere. Common sense tells us that this can't continue for very long.