Article first published as American Corporations are all About Profits – Not People on Technorati.

Have you heard the news that corporate profits hit an all-time high this past quarter? That’s right, with unemployment stuck near double digits and the wages of American workers continuing to fall, American businesses racked up profits at an annualized rate of $1.66 trillion.

So, even though they themselves may be hurting, shouldn’t patriotic Americans cheer these profits? After all, we have a huge federal budget deficit, and at least the tax revenues from these huge profits will improve the shortfall, right?

Wrong. The sad truth is that American corporations aren’t all that American, and they’re certainly not patriotic. General Electric, fourth on the Fortune 500, had an excellent year in 2009, making profits of $10.3 billion. Their U.S. tax bill? Uncle Sam owed them $1.1 billion. How does that happen?

Well, somewhere in their 24,000 page tax return are the details of how they consistently manage to make serious profits overseas but lose money in the U.S..

A similar story applies to Exxon Mobile, our nation’s most profitable company. Their profits for tax year 2008 climbed to a record high of $42.5 billion — the most ever for an American company. They did wind up having to pay $15 billion in income taxes, but unfortunately for Americans, none of that money was paid to the IRS. Exxon’s U.S. tax bill was a whopping zero dollars.

Sadly, these companies are anything but alone in their ability to exploit tax loopholes and dodge paying U.S. taxes. In fact, a 2008 study prepared by the Government Accountability Office (GAO) reported that two out of three American corporations paid ZERO, zip, nada in federal income taxes from 1998 through 2005.

Unlike average Americans, corporations enjoy considerable flexibility in both operations and the resulting tax treatment. Exxon, for example, has several wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands that allow them to legally shelter cash flow. Other corporations, like Google, who was recently able to reduce its effective tax rate to just 2.4%, accomplish their magic by shuffling income through foreign countries using well-known tax strategies like the “Double Irish” or “Dutch Sandwich.”

Google’s use of the “Double Irish” maneuver depends on shifting non-U.S. sales to its Dublin office — 88% of its $12.5 billion in 2009. This technique is also used by others, like Microsoft, and requires that they have two Irish companies (hence the “double”) where one pays royalties to the other which collects the proceeds in a tax haven, like Bermuda.

Make no mistake about it, the use of tax havens is commonplace in corporate America. Another GAO study reported that 83 of the 100 largest American companies have subsidiaries in tax havens. It’s estimated that through the use of such havens, corporations and wealthy individuals are able to evade more than $100 billion in U.S. taxes every year. ATT, GE, IBM, Chevron, they all participate in the dodge.

Even those companies with government contracts, like Boeing, and those who took government bailout money, like AIG, GM, Goldman Sachs and Citicorp play the game. The truth is that the evasion occurs on such a grand scale that 18,000 companies share a single address in the Cayman Islands, a popular haven because of its lack of any corporate or capital gains tax.

What should be done about all of this? Some people advocate the closing of loopholes to prevent such activities. Others suggest that completely eliminating corporate taxes and treating corporate profits as the individual income of its shareholders would be a superior remedy. But whatever the solution, the core truth of the situation remains evident — 21st  Century corporations have no nationality.

Like it or not, we now live in a global economy. Billions of dollars in U.S. tax revenue is being hidden in foreign banks, and millions of American jobs have been offshored to foreign workers. American corporate profits are at an all-time high even while huge numbers of Americans are suffering. The sad truth is that American corporations have but one loyalty, and it’s not to our nation, nor is it to the American people; they are singularly focused on profits, and their only loyalty is to their shareholders.

There’s nothing really wrong with this specific truth. Corporations are legal fictions created for the purpose of making money. They are rightfully focused solely on profits. But there is something seriously wrong with assigning to these artificial entities the rights associated with being a person.

This is exactly what the Supreme Court of the United States (SCOTUS) did in its decision on Citizens United versus the Federal Election Commission. In conferring personhood upon corporations and assigning full First Amendment protections for free speech, the SCOTUS not only made it perfectly legal for companies to lie but also opened a Pandora’s Box of election campaign abuse.

At a time when deep-pocketed corporations already control both political parties, and the cost of Campaign 2010 would hit nearly $4 billion — with Americans fighting to take their country back from the special interests, the Citizens United decision unleashed another $180 million in campaign ads, with $120 million coming from undisclosed sources.

Because of the SCOTUS decision, corporations, even those with significant foreign ownership, now have the power to directly influence American elections. How this can be a positive for our nation is a mystery. The Founding Fathers were certainly not advocates of such corporate power. They fully understood the truth expressed by Justice John Paul Stevens, in his dissenting opinion: “the corporation must engage the electoral process with the aim to enhance the profitability of the company, no matter how persuasive the argument for a broader or conflicting set of priorities.”

Corporations are not people, and what’s good for one is not necessarily good for the other. The Citizens United decision is an abomination upon the American system of government that runs counter to the ideal of one-person-one-vote. It virtually ensures that American corporations will continue to evade paying U.S. income tax while stoking profits with cheap foreign labor. It corrupts the very core of our founding and ensures that a “government of the people, by the people, for the people” will indeed perish from the Earth.

If you are a patriot, if you love your country and care about democracy, you’ll agree that, left or right, our government belongs to The People. Please raise your voice and say NO to the sale of our democracy — join your fellow Americans in ending corporate rule and Move to Amend.

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It’s like Biblical Egypt all over again, complete with the plague of the frogs, only this time — the frogs are Us. The United States of America is in dire straits, the most dire in my lifetime. Years of party politics and pandering to special interests has left our country afloat on a sea of rising problems. Pick your issue, be it banks who rob us, insurance companies who only insure for their profits, needless wars that kill our young and stuff the pockets of the defense industry, jobs, energy, taxes, it doesn’t matter; rudderless and without a destination, America continues to sail on troubled waters. The issues are many, the stakes historical, the arguments heated near a boil, and still too many Americans don’t fully comprehend that gravity of the situation — it truly is a slow burn, and We the People ARE the frogs in the kettle.

Witness the raging debate over healthcare. Are we any better off now that the “reform” bill has passed? Are we any worse? Democrats are optimistic that we’ve moved forward on the need to provide care for more Americans, and that we’ve done so in a fiscally responsible way. Republicans insists that the bill was forced down the people’s throat; that it’s a drastic move toward socialism that will surely trigger Armageddon. Who’s correct? Left? Right?

The truth that America can’t seem to handle is that they’re both right . . . and they’re both wrong. This is a dibilitating core problem in American politics. Our present political system functions more and more like a sporting event. Sides are chosen, and it’s winner take all. This is great for entertainment value, but it totally sucks for addressing the complex issues that face our nation. Our democracy has become completely dysfunctional.

The healthcare legislation is just one example; one for which I’ve already shared my opinion. I sincerely wish it was the only example, but that’s far from the case. The process witnessed during the healthcare debate is simply the latest instance of partisan bickering and diametric opposition to exemplify our broken government. This slam dance is now standard operating procedure, and it guarantees that the real issues will never be addressed.

There is no doubt that this dynamic has crippled our democracy’s ability to serve the needs of the people. But of even greater concern is the irresponsible outcome insured by the marriage of the two warring factions. The net result of the Democrat push for increased social benefits, coupled with the Republican mantra of tax reduction, not only ensures that effective solutions are never instituted, but also serves to keep the public’s attention trained on the diversion and away from the elephant in the room.

This is nothing new for Washington politics, but the gravity of the consequences hits new levels with every passing day. The “more services/less revenue” tango has left America in denial. Little conversation occurs regarding our economic elephant. This Godzilla like beast to which I refer is the deep dark financial hole our illustrious leaders so zealously feed — a hole totaling some $56 trillion dollars as of September 30, 2008, and growing.

That’s right, $56 trillion, with a “T.” That’s nearly a half million dollars for every American household. In the words of David M. Walker, former Comptroller General of the U.S., this is like having, “a huge second or possibly third mortgage, amounting to almost ten times your annual household income.” For the moment, we do still have the World’s largest economy, but even our $14 trillion GDP pales when compared to this mounting debt and liabilities. And when you consider that the budget deficit was $1.42 trillion for fiscal 2009, a full 9.9 percent of that GDP, you get a feel for how we’re feeding our giant reptile.

Recent bailouts and the new healthcare legislation certainly add to the problem, but they alone are not the culprits. The real core issue is complete fiscal irresponsibility on the part of conservatives and liberals alike, and the bottom line is that neither side has the courage to face the music. Though, I guess this is somewhat understandable, since the song they need to play is a dirge, and the lyrics should go something like, “We’re so sorry we sold you down the river for our own personal gain.”

Yes, my fellow Americans, regardless of political affiliations, we’ve all been sold a bad bill of goods. It’s time to stop playing like ostriches, pull our heads out of the sand and take a serious look at our financial mess. Like teenagers with a new credit card, our elected officials have strapped us with a federal debt now over $12 trillion dollars, and that’s not the worst of it. It’s actually more like the tip of the iceberg. The plot sickens much further when you take a look at our unfunded obligations.

As of September 30, 2008, our unfunded obligations, consisting of Medicare, Medicaid, and Social Security totaled nearly $43 trillion. And since the Congress refuses to address the issue and instead continues to add to the balance, the $56 trillion hole (federal debt plus unfunded obligations) for 2008 is expected to bulge to $63 trillion for 2009.

Just in case these numbers don’t grab your attention, you might want to consider that when George W. Bush took office, the hole was a comparatively manageable $20 trillion. During his two terms as President, we had three tax cuts, started two wars, bolstered homeland security and added an extremely expensive prescription drug benefit to Medicare. The combined result of this wisdom enlarged the hole by 176 percent to the $56 trillion number that President Obama stepped into. This is what’s commonly referred to as a snowball effect, and the really scary part is that it’s just getting going.

Indeed, if left unaddressed, the GAO (Government Accountability Office) forecasts that within the next 12 years, interest payments on the federal debt will become the single largest line item in the federal budget. If left until 2040, all federal revenues would cover only the payment of said interest and Medicare/Medicaid. We’d have nothing left for defense, much less Social Security or anything else. Put another way, in order to cover the bills in 2030, our average federal tax rate of 21 percent will have to swell to as much as 45 percent. By 2040, it would be 53 percent, and that’s only the federal slice.

Needless to say, this paints a sorry picture for all of us, but left unchecked it could prove devastating to our children and grand children. All Americans should be absolutely ashamed that we’ve allowed the situation to grow so very bleak. Everybody knows that we’ve been building a house of cards, that you can’t continually reduce federal revenues (cut taxes) and at the same time increase spending (wars and services) and expect things to balance. Our elected official’s intentional obfuscation of the facts may have clouded issues, but in the end, it’s really every American who’s responsible. We’ve spent 30 years in denial and it’s high time to stand straight and face the facts.

The facts are that, contrary to common assertions, we can’t grow or inflate our way out of this big ugly. Yet, unless we want to just subscribe to the contemporary American IBG (I’ll Be Gone) ethic, we need to do our best to address the issues and to do so with some haste. Things will only get worse until we do.

Resolution obviously won’t be easy, but the good news is that we can make it happen, and we’ll all be stronger for the wear. Real patriots will take this challenge in the spirit that created our great nation. They will demand that our politicians immediately stop the destructive rhetoric, cease their incessant partisan bickering, and open a meaningful dialog to address this real and pertinent issue. And they will also accept that the way out will require that we all make sacrifices.

Thankfully, I’m not a politician, and I don’t have to worry about getting reelected, so I can tell it like it is. The fact is that big holes need big shovels, and we’ve done a lot of digging. Our way out is going to be painful. So conservatives, suck it up, because we’re going to need to raise taxes, and liberals, bite your tongues, because social programs will have to see cuts. Social Security and Medicare have to be reformed and the defense budget will need a serious overhaul. It’s time for transformational change, change that will require nonpartisan solutions. I’m sure that recovery will provide plenty to piss off every American, but the only alternative to some scorched buttocks is to just sit in the kettle and be cooked. You’ll have to make your choice. I’ve already made mine.

If you’re interested in more information, please take the time to watch I.O.U.S.A. And when you’re finished, please do get involved. You can start by taking action and writing Congress.

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