Home > Economic, Economic Videos > Student Debt Burden Solution Part 2

Student Debt Burden Solution Part 2

Student Debt Burden Solution Part 2 from Illusionist on Vimeo.

Wealth GapIn the last video we presented information on how the gap between the wealthy and the rest of us has been growing wider and wider, and how the financial elites were not only NOT suffering but were actually thriving in this economic environment, while the rest of us struggle to make ends meet and endure draconian cuts in the social safety net programs and aid to education. All while the financial elites showered themselves with huge tax cuts. Well, unfortunately the situation is even worse than the first video presented.

If you look at the current tax rates, it appears that the millionaires and billionaires have to pay a tax rate of 35%, but this figure is very misleading. It assumes a level playing field for all taxpayers, however, that is not really the case.

Apparent Tax Rates

If you take a look at the number of pages in our tax code, you will see that the size has been growing rapidly until the current tax code is an astounding 71,684 pages in length. So how is it that the tax code has become so large? The answer is very simple, the wealthy elites contribute to the political class and therefore they ultimately control the government and have the clout to have these bought politicians write loopholes into the tax code that enable them to take huge deductions on their taxes. So you end up with a situation where you have an illusionary apparent tax rate, but you also have a real world effective tax rate once all of the deductions are taken. Our 71,000 page tax code is totally riddled with these loopholes. The KEY TERM here is the Effective Tax Rate.

According to Forbes Magazine, the highest-earning taxpayers in the U.S. paid an income tax rate of only 17%–the lowest rate paid by the richest elites during the 15-year period covered by the IRS statistics. So their Effective tax rate is lower than someone who only makes $34,000 a year! They pay a smaller share in taxes than their secretaries, gardeners, nannies, and chauffeurs!

Now while wealthy individuals pay an extremely low effective tax rate, we have a similar situation with the corporations. The largest corporations in the US are supposed to pay a tax rate of 35%. While the corporations bemoan this rate, the reality is that due to the loopholes in the 71, 000 page tax code, depending on what specific industry you are in, the effective rate can actually go into negative territory. For example: Thanks to its deductions and adjustments, GE reported an actual U.S. federal income tax rate of negative 10.5%. It got to add a “tax benefit” of $1.1 billion back into its reported earnings. The actual amount in corporate taxes that the government collects (“the effective tax rate”) is lower than those of Germany, Canada, Japan and China, among others.

Exxon-Mobil paid no taxes. Despite benefiting from this corporate welfare in the U.S., Exxon complains about paying high taxes, claiming that it threatens energy innovation research. The corporate owned media parrots these complaints convincing the average person that corporate taxes hurt everyone. Whay was the saying that Joseph Goebbels, Hitler’s propaganda minister said: “If you repeat a lie often enough, it becomes the truth.” In fact, in 2008, the Government Accountability Office found that “two out of every three United States corporations paid no federal income taxes from 1998 through 2005.

Military fighting for corporationsSo there we have most corporations in the US not paying any tax at all, while they suck local services such as police and fire protections, road maintenance so they move they products or services, as well as international protection by the US State Department and the US Military. These services do not come cheaply and since they are not paying for them, WE ARE!
These corporate executives sit there with their “patriotic” flags on their lapels, while they scheme how to avoid paying their fair share of taxes, cut deals to ship American jobs overseas, and setup tax havens in the Caribbean. Is it any wonder that the rest of the country is mired in this economic misery while they prosper?

So there you have it, the wealthy elites are not paying their fair share, the corporations are not paying their fair share, and the rest of us are struggling.

Foreclosed and evictedSo why am I mentioning this? Because those loopholes will cost the U.S. government $628.6 billion over the next five years, according to a 2010 report from the Tax Foundation.

If all of those loopholes were closed, we could provide every one of the 11-1/2 million college students in the nation with a $54,600 grant.

Or we could provide every one of the 43 million people on food stamps with a check for $14,600.

Think about this, we are taking money away from those who need it the most, so that we can give to the corporate and financial elites of this country, the very people who need it the least.

In the last video, we mentioned that we would show you what YOU can so about this and how this already being successfully done in Britain. However, this video was needed to supplement the first one to better illustrate and drive home the astounding depth of the wealth inequality. In our next video we will show the success story in Britain and explain how students here can start to organize and achieve the same success.

Click here for Part 3 of this article

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  1. Marisa
    March 4, 2011 at 10:02 PM

    Very interesting videos. I thought that the rich paid to many taxes, now I know better

  2. Amanda
    March 9, 2011 at 5:59 PM

    what can we do about this

    • March 9, 2011 at 11:51 PM

      You ask the right question Amanda. My next blog post will outline what we can do.

  3. Spinner
    March 10, 2011 at 9:58 AM

    another good one. looking forward to the next

  4. May 25, 2016 at 5:14 AM

    That is a good tip especially to those new to the blogosphere.

    Brief but very precise info… Thank you for sharing this one.
    A must read article!

  5. June 25, 2016 at 8:27 AM

    When I originally commented I seem to have clicked on the -Notify me when new comments are added- checkbox and from now on each time a comment is added I get 4 emails with
    the exact same comment. There has to be a way you are able to
    remove me from that service? Cheers!

    • June 25, 2016 at 12:36 PM

      Phen375, I cannot seem to find to find your original comment. I thought that maybe if I deleted it, the issue could be solved. Did you use the same phn375 name?

  1. March 10, 2011 at 11:45 AM
  2. March 10, 2011 at 12:22 PM
  3. April 6, 2011 at 2:51 PM
  4. December 6, 2016 at 11:12 PM

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