ICYMI: U.S. billionaires, low taxes, TikTok, and more

A couple of reports document what my dad always knew: the most wealthy and powerful corporations and individuals still get rich off all the rest of us. Robert Reich sums it up on BlueSky:

5 years of exec pay: 

Tesla: $2.5 billion 

T-Mobile: $675 million 

Netflix: $652 million 

Ford: $355 million 

5 years of federal income taxes paid: 

Tesla: $0 ($1M refund) 

T-Mobile: $0 ($80M refund) 

Netflix: $236 million 

Ford: $121 million 

Anyone else see the problem here?

Reich’s quick summary comes from “More for Them, Less for Us: Corporations That Pay Their Executives More Than Uncle Sam,” a detailed study published in March 2024 by the Institute for Policy Studies. In the bullet-pointed summary of its findings:

• 35 major U.S. corporations — including famous names like Ford, Netflix and Tesla — paid less in federal income taxes between 2018 and 2022 than they paid their top five executives. All 35 were cumulatively profitable over that five-year span.
• Among these 35 corporations, the total compensation reported for named executive officers over this five-year period was $9.5 billion. Their combined federal income tax bills came to a negative $1.8 billion — that is, rather than paying taxes, they received refunds.
• An additional 29 profitable corporations paid their top executives more than they paid in federal income taxes in at least two of the five years of the study period.
• 18 corporations in the study — despite reporting net profits over the five-year span — paid $0 in federal income taxes. Actually, except in one case, all paid less than zero because they got refunds. These 18 corporations that paid $0 in federal income taxes found the resources to lavish their executives with a cumulative $5.3 billion in pay packages.
• The 64 firms in the study posted cumulative pre-tax domestic profits of $657 billion between 2018 to 2022, yet paid an average effective federal tax rate of just 2.8% (the statutory rate is 21%) while paying their executives over $15 billion.

Of course, the problem is not just sky-high executive salaries and tax evasion. Even if these corporations were paying the corporate tax rate, that rate is lower than it has been in most of U.S. history. The “effective cumulative federal, state and local corporate tax rate” has been slashed from more than a 50 percent tax on profits in the early 1950s to less than 20 percent now. Before 1967, corporate income taxes made up more than 20 percent of federal income, but corporate tax cuts decreased their contribution to 8.7 percent in 2022.  

The August 2023 Executive Excess report, also from the Institute for Policy Studies, focused on the “Low Wage 100,” the 100 S&P 500 corporations paying the lowest median wage. Among its findings: “Low-Wage 100 CEO pay averaged $15.3 million and median worker pay averaged $31,672 in 2022.” 

As the photo at the top of this blog post notes, lower tax rates help individual billionaires, not just big, profitable corporations. For the record, the highest U.S. marginal tax rate is 37 percent. That is the highest rate paid by individuals on the portion of their income in excess of $578,125 in 2023. That’s a big drop from 91 percent from 1951 through 1963.  

Even 37 percent is too much for the wealthiest taxpayers. Special preferences written into the tax code mean many pay far less. In an analysis that describes legal, illegal, and “gray area” strategies, Vox reports: 

“How much tax a wealthy person owes in a given year is a complex tapestry threaded with exemptions, deductions, credits, and obscure loopholes you’ve never heard of. The ideal is to owe zilch. If that sounds impossible to achieve, just look at the leaked tax returns of the wealthiest Americans that nonprofit news site ProPublica analyzed in 2021: Over several years, billionaires Elon Musk, Jeff Bezos, and Michael Bloomberg, among others, paid no federal income taxes at all.”

The über-wealthy get away with illegal and “gray area” maneuvers because the IRS has been starved of the money or resources needed to audit them. 

“’When I look at what we call our tax gap, which is the amount of money owed versus what is paid for, millionaires and billionaires that either don’t file or [are] underreporting their income, that’s $150 billion of our tax gap,’ [IRS Commissioner Danny] Werfel said. ‘There is plenty of work to be done.’

“Werfel said that a lack of funding at the IRS for years starved the agency of staff, technology and resources needed to fund audits — especially of the most complicated and sophisticated returns, which require more resources. Audits of taxpayers making more than $1 million a year fell by more than 80% over the last decade, while the number of taxpayers with income of $1 million jumped 50%, according to IRS statistics.” 

Meanwhile, Congress focuses on TikTok rather than taxes. 

I don’t want the Chinese government to get my password, fingerprint, facial recognition or personal information. And that’s a real fear: 

“Both the FBI and officials at the Federal Communications Commission have warned that ByteDance could share TikTok user data — such as browsing history, location and biometric identifiers — with China’s authoritarian government. 

“Officials fear that TikTok, which like many other social media platforms collects vast amounts of data on its users, would be forced to give it to Beijing under a 2017 law that compels companies to turn over any personal data relevant to China’s national security.”

TikTok will also be used by foreign governments to spread lies and misinformation in order to influence U.S. political decisions and elections. Of course, the United States does the same:

“Two years into office, President Donald Trump authorized the Central Intelligence Agency to launch a clandestine campaign on Chinese social media aimed at turning public opinion in China against its government, according to former U.S. officials with direct knowledge of the highly classified operation.

“Three former officials told Reuters that the CIA created a small team of operatives who used bogus internet identities to spread negative narratives about Xi Jinping’s government while leaking disparaging intelligence to overseas news outlets. The effort, which began in 2019, has not been previously reported.”

And, as Robert Reich points out in a post on Substack, the threat from China must be balanced against the threat from U.S. billionaires who are lining up to buy TikTok:  

“Should you be more worried about China siphoning off your personal data and manipulating your thoughts via TikTok, or American billionaires siphoning off your personal data and manipulating your thoughts via TikTok? …

“Rich Americans now lining up to buy TikTok, if the Senate goes along with the House and bans the platform from our shores as long as it’s owned by Chinese investors, include a hit parade of irresponsible billionaires — such as the corrupt former Trump Treasury Secretary Steven Mnuchin, Trump lapdog investor Kevin O’Leary, and right-wing megadonor Bobby Kotick.

“Not to forget multibillionaire Republican megadonor Jeff Yass, who already owns a $15 billion (yes, billion) stake in TikTok’s parent company, ByteDance. …

“True, America’s billionaires aren’t in a global race with the United States for world dominance. But they’re in a race with the rest of America to dominate the United States — a race which should be of no less concern. “

Elon Musk and Twitter are Exhibit A for billionaire influence on U.S. public opinion and elections, but the influence of wealth on politics is of far longer standing and goes far deeper than social media. My dad’s suspicion of wealth’s control of political life were well-founded. So I’ll close with one more warning and explanation, this time from the Minnesota Reformer: 

“Just 116 of the nearly 7,400 state legislators in the United States come from working-class backgrounds, according to a biennial study conducted by Nicholas Carnes and Eric Hansen, political scientists at Duke University and Loyola University Chicago, respectively.

“The researchers define legislators as “working class” if they currently or last worked in manual labor, service industry, clerical or labor union jobs. They found that 1.6% of state lawmakers meet that definition, compared with 50% of U.S. workers. Only about 2% of Democrats and 1% of Republicans qualified as working class.”