Paul 1

Trevor Paul

Mrs. Wines

CCP Composition

20 December 2019

The Corporate Tax Dollars we are Losing and Why This Cannot Go On Any Longer

America is trillions of dollars deep in debt and what are we as Americans doing about it?

Every day we stray further and further into debt as we spend money that must be spent, only that

we don’t have anywhere to get that money from. However, there are places that still keep all of

their money, enough to solve many of the problems around the world. Enough that if the shared,

or were forced to share even a fraction of it, it could change the world. Corporations in the US

are heavily avoiding taxes and hoarding as much of the money that they make as possible. This is

causing us to lose a significant amount of needed tax money because of these greedy

corporations taking and hiding their money in foreign banks in order to avoid taxation. It is often

that we give them these tax benefits in exchange for them building factories and making jobs in

America, but is the amount of tax dollars that we are giving up worth it for that, do we need

different ways in order to make tax dollars. This is an injustice to the people of America who

work hard and lawfully pay their taxes to support public funding for things like schools and

libraries. This is all going on behind our backs. American Corporations are avoiding paying taxes

to the United States government, causing funds for many government activities to go dry while

these multinational corporations keep large portions of it, often going straight to executives and

stockholders, for themselves.

 Paul 2

Corporations have been growing steadily over the past twenty-plus years but the amount

that they are paying in tax has actually gone down in those same twenty-plus years. How is this

acceptable and how can we let this continue any longer? Many large, multinational corporations

have been steadily getting bigger, but at the same time, paying much, much less in corporation

tax to the United States government. This loss in tons and tons of revenue that could be used to

fund government projects, is a major loss to our nation as a whole. We need the financial

benefits that these companies bring to us, but that they aren’t delivering for the American people.

On the other hand, over the last fifty years, corporate profits have been going up steadily

and significantly (Devereux 42). This is to be expected of course as the economy of the world

has been steadily going up with the rise of technology. However, with this one would expect to

see that these large corporations are still being taxed at the same tax rate, right? Wrong, in fact,

corporate taxes have actually gone down significantly over the past few decades, and this is

happening not just in America, but in the rest of the world too (Dyreng 461). This shows a

glaring problem in the way that these corporations are taxed throughout the world, but especially

in the United States. A place where these companies are often given some of the biggest tax

exemptions anywhere in the world, most of them are just so that the companies will stay here and

not go international with their jobs. This mentality that they will leave without these tax

exemptions only hurts us though, as they would still have to operate in America for many of their

functions and operations. Most of the money that these companies save end up going straight

into the pockets of the executives and share-holders meaning that these companies are just

keeping the money for themselves instead of using it to help out their country and their people.
 Paul 3

Our nation’s government is very deep in debt. Since the 1930s the United States

government has accumulated over $22 trillion in debt (Chappell n.pg). They originally started

doing this in the 1930s as a way to raise funds in order to employ people during the Great

Depression, but is has gotten further and further out of hand since that time. The plan was to

purposefully get into debt in order to employ the American people, which would then stimulate

the economy and the government with its new tax revenue would be able to pay off the debt as

soon as the crisis was over. It has not gone that way since then. In recent years, the national debt

has skyrocketed to these incredible numbers because of our large corporations avoiding their

taxes and us losing out on other opportunities because of the amount of debt interest that we are

paying already. In fact, much of the government's mandatory spending that it must use a sizable

portion of its revenue on is its debt interest (“Budget of the US Government” n.pg). We are

spending a large portion of the money that we get from taxes in order to pay off debts because

we did get enough tax money from the people, but mainly from the corporations in the United

States.

In the United States only about 8% of the federal tax income comes from large

multinational corporations that are based in the United States. This is going on at the same time

that individual income tax accounts for about 50% of total federal income (Amadeo n.pg). The

fact that most of the United States’ income comes from the individual tax incomes of the people

should not be taken lightly as the fact that many of these companies, nearing a trillion dollars in

total worth, only make up 8% of the tax income in the government of the United States is

outrageous and needs to be changed immediately. This like this cannot be happening as

frequently as they as the government desperately needs the money that it is losing from large,
 Paul 4

silicon valley corporations, ones that started right here in the United States of America. The

government spending a large portion of its income on debt interest, and then losing this much

from the corporations needs to be fixed as it is a blatant problem in our economy in the United

States and if this continues then things will start to get ugly very quickly.

Lastly, the problem that is seen from the outside is much, much bigger than what many

people think in the United States may think. Over the past few decades, things have gotten worse

in almost every way imaginable whenever it comes to the subject of a corporation tax in the

United States. Much of problems not only exist in the United States, even though we are one of

the major centers of it, these problems also exist in many other countries around the world,

especially more western countries like western Europe and the Americas. Much of this money is

being taken by these companies and with so much of it being hoarded by them, they are refusing

to allow many of the countries to develop as fast as they could or would. In fact, these wealthy

people and executives that end up with all of the money tend to prevent economic growth as if

the money is just kept and never used, then the money is going nowhere and will not stimulate

the economy. All of this by itself would be one thing, but, on top of this, the government is

giving huge tax exemptions to these corporations for basically nothing in return (Armstrong 13).

This shows just how much these companies are avoiding their taxes and it is hurting our

economy badly. The taxes we lose from these exemptions allow could go so much further than

into the pockets of these shareholders.

Other strange occurrences along with the exemptions also shows just how much of an

issue it is. With so much business for the United States based companies coming from abroad,

one might assume most of that would be taxed for corporate income and profit, right? Wrong,
 Paul 5

much of a corporation's income that which comes from abroad and is not taxed, even though

most of what they say is their income, is coming from across the pond (Sullivan 80). This is also

shows just how big of a problem is here in America. The problem has become so big that other

countries from around the world, even when banded together by a common enemy, still can’t do

a thing to stop it. This is a problem that even multinational organizations can’t solve with their

current power. An even bigger issue that is coming from these large issues in corporate taxation

is that many people, including common people and non-billionaire CEO's are defending this still.

A large portion of the reason that the United States government gives these corporations

the tax reliefs that they want is that people that they will leave the United States and take jobs

with them to other countries around the world, mainly places in East Asia like China (Armstrong

4). Now, this is understandable to some degree as the last thing that Americans want are their

jobs being taken from them and given to foreign countries on the other side of the world.

However, this is not the case in most, if not all scenarios that involve these taxes. Many

corporations that commit to avoiding these taxes are American based and already have many

different places around the world that they have jobs in other than America, but are unable to

move there because of the opportunities that they need in America. They also are funneling their

money through other countries because of taxes anyway so taxing their total international

income, not just American income, would be ideal as it would cover all of the bases. As well as

this, taxing the total amount of income that American companies make around the world, as was

said earlier, would mean that it would be very hard for these companies to funnel their money

through tax havens as it would just be taxed anyway as international income.

 Paul 6

One should take away from this paper that corporations are being very greedy with their

revenue and avoiding paying American taxes the best that they can, just to be able to keep as

much of it as possible. And they should take away that it is not right and should be changed

immediately as for the proper income tax should be placed on these corporations, no matter

where the money is coming from. The fact that this has gone so far is disgusting, we, Americans,

need this money, but are getting none of it. They have been paying less and less every year until

eventually, that number will reach zero. Whenever that happens, we will really be in trouble.

This can all connect right back to the American dream of being happy with what you do and

being equal to all with their opportunities that they have. With these large corporations avoiding

their taxes that they definitely should be obliged to pay, it creates unfair advantages to small

businesses that operate locally and legally. These small businesses are put at a disadvantage from

the start, preventing them from following their American dream. If this continues, the American

dream may be put to an end by these greedy corporations.

 Paul 7

Works Cited

Amadeo, Kimberly. “Who Really Pays Uncle Sam's Bills?” ​The Balance, The Balance​, 24 Nov.

2019, https://www.thebalance.com/current-u-s-federal-government-tax-revenue-3305762.

Armstrong, Christopher S., et al. "Corporate governance, incentives, and tax avoidance." ​Journal

of Accounting and Economics,​ vol. 60, no. 1, 2015, pp. 1-17. OhioLINK Electronic

Journal Center, doi:10.1016/J.JACCECO.2015.02.003.

“Budget of the U.S. Government.” ​USAGov​, https://www.usa.gov/budget

Chappell, Bill. “U.S. National Debt Hits Record $22 Trillion.” NPR, NPR, 13 Feb. 2019,

https://www.npr.org/2019/02/13/694199256/u-s-national-debt-hits-22-trillion-a-new-reco

rd-thats-predicted-to-fall.

Devereux, Michael P. “DEVELOPMENTS IN THE TAXATION OF CORPORATE PROFIT IN

THE OECD SINCE 1965: RATES, BASES AND REVENUES.” 24 May 2012.

Dyreng, Scott D., et al. "Changes in corporate effective tax rates over the past 25 years." ​Journal

of Financial Economics,​ vol. 124, no. 3, 2017, pp. 441-463. OhioLINK Electronic

Journal Center, doi:10.1016/J.JFINECO.2017.04.001.

Sullivan, Martin A. ​Corporate Tax Reform: Taxing Profits in the 21st Century​. Apress, 2011.