Thursday, July 21, 2011

THE GOVERNMENT: A CORPORATION’S BEST FRIEND

THE GOVERNMENT: A CORPORATION’S BEST FRIEND
By Bob Confer

Editor’s note: This is the third in a four-part series about how large corporations evade federal taxes and abuse US taxpayers.


Countless small businesses like mine devote an incredible amount of time and money to ensuring tax compliance. From internal checks and balances to the utilization of outside accounting firms, we all dot our “Is” and cross our “Ts” whilst we record and pay our annual and periodic taxes. Even then, no matter how exacting we may be in the details, it seems like the threat of a federal audit always lingers. The mere mention of the IRS sends chills up a businessperson’s spine.

The above paragraph can be equally applied to individuals. Most of the people reading this newspaper dutifully file their annual tax returns and other than some of the more obvious tax credits do little to stray from paying nearly the full amount in taxes. Truth is the basis of their returns. It’s the legal and moral thing to do and most folks fear the repercussions of being caught in a mistruth.

Large corporations, on the other hand, don’t seem to live in the same world that you, I, Confer Plastics and the local barber shop do. They stretch the very definition of tax compliance and do everything within their power to evade paying taxes, despite great profits that demand the contrary. They know the intricacies of the tax system and the myriad strange loopholes.

From this, the questions have always been: How do they know about all of these loopholes? How do they weave these webs of legal (and I use the term “legal” quite loosely) deceit? Where’s the IRS?

The answers are quite simple and singularly identified: The government is their friend.

Whereas we respect and/or fear the IRS, they look at it as its closest ally. As a matter of fact, they look at the IRS as their best source of talent. Who better to beat the system than those who made a career out of being a part of it? IRS agents and auditors – more so than any accountant ever could - best know the tricks of the trade and what worked for other corporations that were successful in abandoning their responsibilities. Tax cheat GE, for example, employs nearly 1,000 people in its tax department alone, most of them former government employees.

The strange bedfellows don’t end there. The corporations were allowed to help make – if not outright craft - the rules that seem to be made just for them. They were the ones appointed to special committees and agencies or who, thanks to huge donations, were given special audience and influence with the elected officials. In the 9 months leading up to the bailouts in 2008, 19 banks spent $32.4 million on lobbying. 2010 was even worse: The top 19 banks spent just under $49 million.

Supporters of the “free markets” will cite the secret backdoor workings of tax law or the hiring of IRS agents and the use of their intellect to help their employer beat the Taxman as good business. If they do, they’ve been drinking Wall Street’s Kool-Aid. I’m a staunch supporter of truly free markets and I know a free market when I see one, and the market that GE, the oil companies and the financial institutions operate in is certainly not free. It’s fascist, which puts the greatest power in the hands of the few, which is just as bad as the socialist economy Corporate America says Obama is driving us to.

At its macro level ours is marketplace where the government hands to the few large companies special privileges over the small ones. Among them is a tax system that accommodates those with the vastest resources and the least amount of morality. They don’t have to pay the economy’s “user’s fee” (tax) like us little guys do. That can, in part, account for the statistical absence of big companies - 500 or more employees - in the United States (less than 1% of all firms). There are barriers of entry (specifically, competitive disadvantages) to the next level of the marketplace that most cannot overcome.

Yes, Corporatism is alive and well in America. That, in conjunction with an oversized federal government, is exactly what’s stifling honest-to-goodness laissez-faire capitalism in this post-recession era and creating a cancer within our nation’s fiscal health. Obviously, if large corporations actually paid taxes the little guys would be equally competitive and we as a nation might not be obsessing about the debt ceiling right now.




Bob Confer is a Gasport resident and vice president of Confer Plastics Inc. in North Tonawanda. E-mail him at bobconfer@juno.com.


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This column originally ran in the 25 July 2011 Greater Niagara Newspapers

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