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CORPORATE TAXES

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TAX

WRITTEN BY DOMINIQUE DINARDO

In a society where working hard and earning money is so deeply valued, why are some of working-class America’s earnings being taken away?  

The answer is simple: taxes.

Corporate taxes take money away from salaries of workers in businesses during a taxable period. This causes a depreciation of revenues for both the companies and the individuals themselves. That does not include putting money aside for a 401k, health benefits or social security.

For example, an employee’s corporate salary may be $40,000. However, after taxes have been taken, both city and state, and deductions for savings, health insurance and social security have been made, the individual may only be left with a little over half of that.

In the state of Pennsylvania, there is an income tax of 3.07 percent.  If a person pays $500 monthly, $250 bi-weekly, to take care of those additional deductions, their once over $1,500 bi-weekly paycheck has now been diminished to a little over $1,100 bi-weekly. While $500 may not seem like a lot to lose, over the course of a year, a once $40,000 salary comes to a total of $30,000.

CORPORATETAXES

GRAPHIC DESIGNED BY DOMINIQUE DINARDO

This is often one of the reasons that so many flock to working for big businesses. The profit a corporation makes from its shareholders is taxed. Additionally, the corporation then taxes the shareholders, which is called a dividend. This is where the double tax comes in from working with big corporations.

“The regulatory environment has grown so much, they’ve created thousands upon thousands of new regulations that are not just I need a dollar here,” Eric Hunt, PR manager of HuntRomanGroup said. “It’s I need ten dollars there.”

So, what are the big businesses doing about this? They do not want their money to be taxed so highly so how can they avoid it?  Many companies such as Apple and Microsoft will store their billions outside of the United States to avoid this corporate tax.

Throughout every presidential campaign, there is much discussion about taxes.  Many agree with conservatives, while others have a more liberal approach to the topic.

“Basically if you think about any issue anybody cares about, whether it’s on the left or the right, there is a difference in opinion,” Larry Lessig, general council of the Campaign Legal Center  said. “Bernie Sanders talks about single care health care, climate change legislation, dealing with minimum wage. People on the right talk about simplifying taxes or getting us a shrinking the size of government. All of these issues are impossible to address sensibly unless we address the fundamental corruption in our democracy first. Really the way to think about that is at the core of our democracy, there is a failed institution and that institution is Congress.”

In reality, Congress is the only one who can control the percentage of taxes that comes out of the working man’s paycheck, thus causing tension throughout any presidential election. Among all countries with an established economy, the U.S. has the highest corporate tax rate.

With so many being unemployed or working under the table, the reason behind this may be more clear.  

Why work if Congress will just take an employee’s hard-earned money?

EMPLOYMENT

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WRITTEN BY AMY HELD

Savings, retirement accounts, home ownership and all other financial assets add up to create wealth. When you take a deeper look at wealth inequality in America, it becomes quite obvious that a disparity exists by gender and race.

Income inequality affects wealth inequality because, over the course of a lifetime, lower earnings make it much harder to save and accumulate assets or wealth.

Women are affected in a big way by this disparity. According to the Bureau of Labor Statistics, in 1998 women ages 45 to 54 earned 70.5 percent of what men made and women ages 55 to 64 made 68.2 percent of what men made. Since 2004, women’s earnings have been anywhere from 80 to 83 percent of men’s earnings.

Women are still lagging behind, making it very difficult, especially for single mothers, to save, purchase a home or prepare for retirement.

The disparity of wealth is also obvious by race as a whole. A 2013 report from the Urban Institute revealed that whites have seven times more wealth than African Americans and six times more than Hispanics.

African Americans and Hispanics own a much smaller percentage of homes in the U.S., have less money saved and less in retirement savings. Over a lifetime, the average white person makes $2 million, African Americans $1.5 million and Hispanics $1 million.

Lower earnings lead to less savings, making it less likely to have a 20 percent down payment on a home.

According to the same Urban Institute report, African American families average more student loan debt than white families. When you combine this with a lower graduation rate for African Americans, the result is less wealth accumulation.

Wealth is a necessity for everyone to have economic security  and to be able to move up the economic ladder. Women need to be paid equally for doing the same job as a man and people of color, coming from a disadvantage, should be given the opportunity of low cost education and lower interest/down payment home loans in order to lessen the wealth gap.

JOB CREATION

WRITTEN BY AMY HELD

Jobs in the U.S. are affected by taxes, regulations, international trade and politics/special interests also play a role in their survival and creation.

A research study presented by the National Bureau of Economic Research regarding what types of businesses create the most jobs revealed the younger companies are, the more jobs they create.

The problem with startups is they typically last about five years. As a result, those new jobs are lost. The fact is, according to NBER research, startups make up three percent of employment, but almost 20 percent of gross job creation.

Erik Hunt, a senior human resource executive, co-founder and managing partner of the HuntRoman Group, said they provide virtual human resource support to small- and medium-sized businesses.

Hunt goes on to say, “Small businesses are burdened with this kind of taxation, regulation over and over and it only gets harder when politicians think there’s a revenue stream that isn’t there.”

If our system is set up to overtax and overregulate small and new businesses, it would seem they are being set up to fail. The system is then hindering job creation.

The solution here is to change tax policies and government regulations burying small and startup businesses in order to stimulate job creation.

International trade has a big effect on jobs. There has to be a balance between imports and exports and if the balance is off, there can be a trade deficit. In 2015, the U.S. partnership with Trans-Pacific countries created a trade deficit and cost the U.S. 2 million jobs.

The solution is to give both foreign and U.S. companies the incentive to keep and bring their factories to the U.S. Tax incentives and less regulations will play a big role in keeping and attracting new companies to the U.S., thus creating more jobs.

If politics plays a strong role in job creation, are the priorities or special interests of politicians overlooking the public’s health/safety, opportunities to create jobs, stimulate the economy and reduce the wealth gap?  

Scott Shipe, a project manager for the Frederick County Government in Maryland and the government affairs chair for both the Chesapeake Water Environment Association and the Chesapeake Section American Water Works Association, said the U.S. has been given a grade of D minus from the American Society of Civil Engineers for not keeping up with the ageing water infrastructure. The U.S. spends $38 billion annually on water and sewer band-aid repairs.

According to Shipe, the average age of pipes in the U.S. is 70 to 80 years old and there are 1,200 utilities east of the Mississippi River that are way over 120 to 130 years old. The life cycle of most pipes is 50 years.

Seven water agencies sent letters to Congress and senators on the budget and finance committee that stated, “Investments in the water and wastewater infrastructure provides significant economic benefits to our communities. The U.S. Department of Commerce estimates that each job created in the local water and wastewater industry creates 3.68 jobs in the national economy and each public dollar spent yields $2.62 in economic output to other industries.”

They estimate that it will take 25 years to replace our nation’s ageing water infrastructure at a cost of $1 trillion. Shipe said, “A $100 million project is significant and it would take thousands of people and involve about 50 to 60 industries.”

This would create thousands of blue collar jobs, and white collar jobs as well.

In 2014, the Water Infrastructure Finance and Innovation Act was passed. Because WIFIA is a loan program at treasury rates, it results in no long-term net cost to the Treasury or U.S. taxpayers.

Shipe has been going to D.C. for 14 years, lobbying and sitting in on analysis and finance meetings that determine where EPA funding will be spent. Due to the political makeup of our country, Shipe does not see a big movement to make these repairs.

Repairing and replacing our nation’s water infrastructure is a necessity and would create thousands upon thousands of jobs. The solution here is that the U.S. government should make the investment in public safety to stimulate the economy and job creation.

Tax incentives, lessening regulations, balancing trade in our favor and investing in water infrastructure are all solutions to creating new jobs in the U.S., thus reducing the wealth gap.

The Problem

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Public sector policies also effect private sector practices, and together they are the root problems encouraging wealth inequality.  Since public sector policies are created by politicians and their staffs, reforming the ways politicians are elected could be the the beginning of  policy change.  Changing campaign financing and rectifying voting injustices are two places to begin reforming election procedures.

“So basically if you think about any issue anybody cares about whether it’s on the left or the right,” Lawrence Lessig, 2016 presidential candidate and Harvard Law professor, said. “All of these issues are impossible to address sensibly unless we address the fundamental corruption in our democracy first.”

Before diving into money’s involvement in wealth inequality, it’s important to take a look at the history of how the United States got to this point. While many people feel that campaign financing and voting injustices are equally feeding the policy decisions that are promoting wealth inequality, as far as chronology goes, it is unethical campaign financing that reared its ugly head first.

Take a walk down memory lane and have a look at the unethical political funding by the wealthiest Americans throughout history.

The problem is not that these wealthy families are providing most of the campaign funding, thus calling the shots, it is that the shots that they are calling do not benefit the vast majority of Americans.

Some people currently in policy-making positions base many of their decisions on self-interests, experts say.

“Our country, in many respects has been taken over, whether it’s capitalists or politicians, by a lot of psychopaths,” Stephan Clyburn, professor of political science at West Chester University, said.

According to Clyburn, those in power can range from the podiums of Washington to behind the desks of big businesses. Regardless of where they reside, they both hold immense power in political decisions.

“It’s the politician who tries to play both sides of the issue, and tells every audience what they want to hear,” Clyburn said. “It’s the capitalist who only cares about accumulating wealth and doesn’t care about the impact of his or her behavior on society as a whole.”

Like Clyburn, Lawrence Noble, general counsel at The Campaign Legal Center, holds similar views about those currently making policy decisions.

“If you define evil as being purely self-motivated, not caring about what happens to the rest of society–yes, there are a lot of people out there like that,” Noble said.

Noble uses this definition of evil to describe those who use money to dictate what policies to enact. He dubs this practice “free market politics.”

“Free market politics means that those with money feel as though they can buy all the politicians they want because they know how to run the government,” Noble said. “But that’s not what democracy is all about.”

Clyburn and Noble’s views mirror much of the American public’s.

According to Pew Research, 74 percent of Americans believe that most elected officials put own interests ahead of the country’s, and only 19 percent trust the government always or most of the time.

“I think what not being talked about, what’s not being recognized, is just how grotesquely our democracy has been wrecked,” Lessig said.

The two most malevolent ways that our current political system perpetuates this cycle of wealth inequality and maintains the status quo is through unethical campaign financing and voting injustices.