As noted in a previous blog, many complaint letters have flowed into the SEC from corporations begging for "exemptions" from the Volcker rule. The apologists (mainly in The Wall street Journal) for these corporations argue that if Uncle Sam and his treasurys, debt securities merit an exemption, so do corporations, as well as local, state bond proferrers. I basically shot these arguments down.
But let me add one more reason why corporations don't merit any exemptions from the Volcker rule: they are already making out like bandidos with their ridiculously low tax rates for which the rest of us must compensate! According to a special report in TIME (Feb. 20, p. 16), the effective corporate tax rate is now 12½ %, as opposed to the rate of 35% they are suppose to theoretically pay. This turns out to be, according to the TIME report, "the lowest rate in at least 40 years".
Part of the reason for this aberration (which I regard it as) is that Uncle Sam himself "has allowed companies the right to write off 100% of the purchase price of new equipment in 2010 and 2011". This was done to theoretically "spur investment and creating jobs". One wonders then how come these companies are still sitting on almost $1.5 trillion while job growth barely ekes in at 240,000 a month or barely double the population replacement level. Clearly, someone is gaming the mix, which is what you'd expect in an economic system predicated on Pareto optimality.
TIME also notes:
"The rate also reflects the firms' deft use of loopholes".
The report doesn't elaborate but one can pretty well guess what these loopholes are, as their news has been in the mainstream press the past 2-3 years. One I recall is that money "repatriated" back to the U.S. (from foreign operations) is able to come back "tax free". Then, we've already been aware of the other major corporate loophole (which to my knowledge has never been corrected) that companies can merely hang out a shingle in front of a dumpster in Aruba or the Caymans and garner tax-free status.
Whatever the reason, the corporate tax avoidance is having a dunning effect on our society along with the top 1% escaping their own fair tax assessments. According to TIME, corporations in toto now account for only 9% of the nation's tax bill compared to 40% in 1943. No wonder there was so much better quality of life back then and in the immediate post-war years!
There are a few companies who are paying the 35% rate, but according to tax attorney Howard Barnett quoted in the TIME report:
"It's just a few sucker companies out there that pay the full corporate rate".
Hmmmmm......maybe, as opposed to being suckers, those companies are the real corporate patriots....the remainder being Pareto-hijacked jackals out for themselves.....snickering away while the citizenry picks up their tab and they use their ill gotten gains to fund horrific super PAC ads!