There is an increasing movement in an attempt to blame capitalism and corporations for the country's ills.
A few years ago I had the privilege of conducting a weekly class on economics to the 10th grade students of the Heber Springs High School. This was sponsored by Junior Achievement.
Not surprising there was a plethora of misunderstanding and/or lack of knowledge on how our economy works. And why not; when I was in the 10th grade, sports and girls ranked way ahead of the unemployment rate and the national debt. The difference, I believe, between now and then is that many years ago we didn’t have the media and the lefties continually bad-mouthing the companies that produce our goods and services. Nor were the corporations always portrayed as greedy entities that didn’t pay their fair share of taxes.
In one session with the Heber Springs’10th graders I asked them to estimate the percent of profits on sales of Exxon Mobil. The guesses ranged all the way from 25% to 90%. To some it was a little shocking to learn the percentage was around 8 percent. As many of you know, the percent of profits in many corporations are closer to 4 and 5 percent and others lose money.
With this background in mind move now to a front page article in the April 2nd issue of The Sun Times by one of the paper’s left leaning reporters whose opinion column is disguised as a news story. Mr. Dan Heyman tells us that many corporations pay no state taxes. First of all, it is completely inaccurate because all active corporations pay property taxes, payroll taxes, sales taxes and other fees and licenses.
Nevertheless, this carelessly written column repeats the charge of no taxes paid. Assuming he meant to say income taxes he then reveals his sources as two left leaning think tanks that traditionally bad-mouth corporations.
Let’s take his reported facts as true. He tries to shock us by revealing that at least 90 of the Fortune 500 companies paid no (income) taxes to any state for one of the past six years. By phrasing it this way it could mean that only 3 percent of these companies paid no state income tax during the six year period.
You might think any interested or thoughtful reporter might be a little curious as to why any corporation pays no state income tax in any one year. Here are a few reasons:
1. They simply had a loss year. This happens more often than you might think. For example giant Bank of America had losses two of the last five years.
2. They had a carryover of losses from prior years even though they had a profitable one this year. The tax law rightfully allows this for both individuals and corporations.
3. Their profitable operations are overseas while their headquarters and most over head are in the states – only expenses here.
4. They primarily operate in states like Texas, Tennessee, Florida and others that have no state income tax.
5. They are companies who receive wind, sun and ethanol or other credits reducing their state income tax to zero.
6. There may be other situations for a particular company that reduce taxable income or provides enough credits so there is no tax due for a particular year – for example - accelerated depreciation.
To pull on your heartstrings Mr. Heyman quotes Rich Huddleston, Director of Arkansas Advocates for Children and Families, who proceeds to tells us if companies pay less tax, the state has less money for the services its residents need. Well, Hallelujah!
I never thought of that. If corporations simply realized this type of original thinking, I’m sure they would gladly pay more.
Let’s not forget another “progressive” columnist for The Sun Times who complained two or three times about the millions of sub-chapter “S” corporations who never pay any federal or state income tax. This fallacious charge finally stopped when a reader of The Sun Times pointed out that sub-chapter “S” corporations are treated like partnerships for income tax purposes and 100 percent of the profits are taxed directly to the shareholders.
All this points out two important points: First, it would be a good idea if columnists and reporters know just a little about the topic before drawing misleading conclusions for the readers. Secondly, there is an increasing movement in an attempt to blame capitalism and corporations for the country’s ills. Capitalism is the best system in history to distribute benefits based on accomplishments (profits) instead of the entitlement philosophy. Corporations are the entities that produce goods and services for all of us. They also employ millions of people, provide for pensions and health care for the same millions and pay billions of dollars in all kinds of taxes at the federal, state and local level.
Earlier in this column I referred to a program sponsored by Junior Achievement. At one of our planning meetings I was informed by a high ranking college administrator we can’t really teach capitalism because it’s too political. How can we be objective with our students when educational leaders are so misinformed – worse yet, politically biased?
(Jerry Jackson of Heber Springs writes his “conservative viewpoint” column each week)