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Are corporate tax breaks now ho-hum?

Jeremy Hobson Aug 12, 2008

Are corporate tax breaks now ho-hum?

Jeremy Hobson Aug 12, 2008


Kai Ryssdal: Lemme get your reaction to something here for a second. If I told you there was a report out today showing two thirds of all Americans didn’t pay any income taxes, would you be surprised? Outraged, maybe? If you are, calm down. There’s no report saying that at all. But there is a study out today from the Government Accountability Office saying something similar. It finds that between 1998 and 2005, two thirds of companies in this country had at least one year where they didn’t pay any federal income tax. So, back to the outrage. Where is it? Marketplace’s Jeremy Hobson has the story from Washington.

Jeremy Hobson: It’s always easy to find outrage on Capitol Hill. Here’s Democratic Sen. Byron Dorgan.

Byron Dorgan: Corporations used to pay a fair share of the tax burden in this country. They no longer do.

What will Dorgan be able to do about that? Probably nothing, says Harvard Business Professor Mihir Desai.

Mihir Desai: While it’s very easy to point your fingers at corporations, it’s very tough to actually get legislation passed that contradicts their interests.

Now, no corporations were named in the study, so it’s possible many of those that paid no taxes made no money, though the GAO says companies reported trillions of dollars in sales during the relevant period.
Cato Institute Tax expert Dan Mitchell is one American who’s not outraged.

Dan Mitchell: We’re all better off when American companies are doing well, so I don’t buy into this mentality that it’s somehow corporations versus people because all corporations are GOA collections of people.

Behavioral Economist Dan Ariely is the author of “Predictably Irrational.” He says, for starters, Americans don’t get outraged very easily.

Dan Ariely: When was the last time you saw a serious demonstration?

He says it’s even harder for us to get all worked up over something as seemingly distant as corporate taxes.

Ariely: There’s no question that if these people opened a newspaper and thought that one of their neighbors did not pay their taxes, they would be offended personally. But the fact that a company does it — it’s not really clear to him where the money is going.

Ariely says if people knew how much they were paying to make up for corporations, attitudes would probably change. The GAO did not give a figure on that.

In Washington, I’m Jeremy Hobson for Marketplace.

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