Deducting Truths All the Way to the Bank

Among the many, many lies Republicans tell us with regards to taxation in the United States is the old chestnut about the US having the highest (corporate) tax rates in the world.

Tax Rates

First off, that’s a bald-faced lie disproved by a simple Google search or even a cursory glance at actual data. According to the right-wing think-tank TaxFoundation.org (that is, a biased source whose page’s data is slanted in favor of the lower-taxes argument), Chad and the United Arab Emirates still have higher corporate tax rates than we do. (See https://taxfoundation.org/corporate-income-tax-rates-around-world-2014) Other sources peg us even lower than that.

More importantly, though, that argument leaves out an intrinsic element of the US tax codes: deductions. [1]

There’s a monumental difference between the BASE tax rate and the ACTUAL tax rate. The first is what taxpayers (corporate and otherwise) are assumed to owe BEFORE DEDUCTIONS. The second is what they actually pay after deductions.

Who gets deductions? Why, whomever knows how to claim them to their most favorable benefit, of course.

Said claiming generally requires one or more professional accountants. The more money you have, the more you can afford to pay accountants to find those deductions for you.

As a result, working-class taxpayers are paying even more than their fair share in taxes than is immediately apparent. Wealthy taxpayers can afford to cut their actual tax rates; large corporations have whole teams of such accountants, whose jobs depend upon the maximum exploitation of all legal deductions and other loopholes… and often many legally questionable ones as well. Non-wealthy Americans, on the other hand, have to make do with tax services like H&R Block, whose services cost hundreds of dollars per year. (I know, as I often hire them myself.) Can’t afford those few hundred dollars? Sorry, Bunky – guess you’re screwed. Too bad you’re not wealthy, right?

Now, Republicans like Chuck Grassley would have us believe that taxes must be cut in favor of the wealthy because, as Chuckie put it the other day, those people are “investing” their money in the nation’s economy as opposed to spending it. Beyond the obvious fact that spending money is investing it in the economy [2] (Chuck, dear, do you need a remedial economics class? Apparently so…), Chuck and his ilk conveniently “forget” that the entire purpose of U.S. tax deductions – the entire reason they exist to begin with – is to… wait for it… get wealthy taxpayers and corporations to invest that money in the American economy… by spending it. [3]

Chuck Grassley knows this. Rush Limbaugh knows this. Donald Trump knows this better than perhaps anyone else in the US government, because he’s had his accountants doing it for decades.

But they all know that the average taxpayer doesn’t know this.

Tea Party

And so they keep throwing out statements about us paying the highest taxes in the world (which, again, is a lie before deductions even enter into the discussions), so that Joe Six-Pack and Jane Working Mom will get up-in-arms and grab up their teabagged tricorn hats and hit the bricks with signs saying “Taxed Enough Already” on their way to pull the Republican lever on their local voting booths… again.

Meanwhile, the Republicans (and many Democrats, too) continue to literally peddle the fiction of catastrophic tax rates all the way to the bank… a bank at which, friends and neighbors, they get the best breaks, the finest rates, the highest credit, and the most deductions… leaving you, dear working-class Americans, paying way more than your share, and a lot more, proportionately speaking, than they do… while they’re deducting the money they pay to you from their taxes, AND slashing your pay, cutting your benefits (which are, incidentally, part of your contracted compensation for the labor you sell to them… so they’re paying you even less), and yet still paying these reprehensible “representatives” to make them pay even lower taxes while YOU pay even more.

Get informed, folks.

You are being played.

All the way to the bank.

Again. And again. And again…

banker-laughing

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FOOTNOTES
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1. “…Tax deductions can be the result of a variety of events that the taxpayer experiences over the course of the year. Tax deductions are removed from taxable income, also known as the adjusted gross income, and thus lowers the taxpayer’s overall tax liability…” Investopedia.com

2. “…I think not having the estate tax recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies…” Chuck Grassley, to the Des Moines Register

3. “…Assume the government has a 35 percent tax rate on business income along with full expensing. When the baker purchases a $1,000 oven, she can deduct the expense from her taxable income, which reduces her taxes by $350. This effectively returns to the baker $350 when she files her taxes…” TaxFoundation.org

 

About Satyr

Award-winning fantasy author, game-designer, and all 'round creative malcontent. Creator of a whole bunch of stuff, most notably the series Mage: The Ascension, Deliria: Faerie Tales for a New Millennium, and Powerchords: Music, Magic & Urban Fantasy. Lives in Seattle. Hates shoes. Loves cats. Dances a lot.
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