Many loopholes that businesses won in the tax code further reduced corporate taxes. A 2008 Government Accountability Office study found that 55 percent of United States companies paid no federal income taxes during at least one year in a seven-year period it studied. It also found that from 1998 through 2005, two out of every three United States corporations paid no federal income taxes. One favored strategy for avoiding taxes is to shift profits to countries with low tax rates. According to a 2013 Congressional Research Service report, United States corporations operating in the top five tax havens (the Netherlands, Ireland, Bermuda, Switzerland and Luxembourg) generated 43 percent of their profits in these countries but employed only four percent of their foreign employees and seven percent of their foreign investment in these locations.
Lower corporate taxes, combined with lower taxes on the wealthy, contributed to government deficits and provided ammunition for the conservative argument that the United States could no longer afford a government that provided extensive services or took on ambitious regulatory efforts to protect public health or the environment. In fact, as President Reagan put it, government became the problem, not the solution. This represents an amazing bait-and-switch by big-business–minded leaders in the United States: by failing to tax businesses, they rob other government programs of the tax income needed to carry out their social functions. Then, when the government’s bottom line looks bleak due to the dearth of tax revenues, it’s the social programs, not the free-wheeling corporations, that get the blame and suffer the budget axe. The political support that corporate leaders have generated for this austerity program, despite its devastating impact on public health and poverty reduction, is one of their greatest triumphs.
In summary, lower rates for corporate taxes and capital gains taxes, combined with the lower personal income taxes for the wealthy inaugurated by President George W. Bush in 2001 and 2003 hurt the health of the public in three important ways. The tax cuts increased income inequality, a powerful contributor to health inequality. They deprived the government of revenues needed to maintain strong public health and other safety net programs. And, by freeing capital for investment, they fueled the growth of the corporate practices that encouraged hyper-consumption with its attendant increase in chronic diseases and injuries.