As I See It: A Taxing Situation

May 6, 2019 Victor Rozek

A few weeks ago, millions of us took a deep, resentment-laden breath before signing our name to a check and sending it off to the federal government. Taxes, the eternal pebble in the workingperson’s shoe, are as unpopular as they are necessary, and remain the subject of endless debate over who should pay and how much.

In a system rigged to favor those with money-wielding lobbyists, IT professionals are part of that vast pool of middle-class dupes who neither make so little as to be exempt from taxes, nor so much as to be able to avoid paying them altogether. Based on salary surveys, the Feds are predicted to siphon 24 percent of an IT professional’s earnings, and the States will tap a few additional percentage points via income and/or sales tax.

While losing more than a quarter of your wages is not generally a cause for celebration, IT professionals may be comforted by the fact that IT-related jobs are among the most highly compensated in the nation.

24/7 Wall St recently reported that seven of the top 25 paying jobs are in Information Technology — all of them well above the median wage of $44,564. Here’s how it shakes out:

• At the bottom of the compensation tree are Web Developers, who average a respectable $67,990 in salary. The position can expect a growth rate of 15 percent over the next seven years, and there are currently about 126,000 Web Developers in the country.
• Next comes the ubiquitous Computer Programmer, who commands an even more respectable $82,732 salary. The long-term outlook for the position is weak, however, with a predicted 7.2 percent decline through 2026. There are presently some 428,000 Programmers who will be vying for a shrinking number of available jobs.
• Systems Analysts enjoy a median annual income of $88,270, and a predicted growth rate of 9.1 percent. Oddly, there appear to be more Analysts than Programmers: 581,960 to be exact.
• Network Architects are the first to break the 90K barrier at $91,780. There are currently about 112,000 Network Architects, and their numbers are expected to grow by 6.5 percent.
• Just ahead on the salary scale are Hardware Engineers who command a median salary of $92,144, with an expected growth rate of 5.5 percent on a current employment base of 70,000.
• Information Systems Managers don’t quite crack the six-figure ceiling but will still be able to afford a morning latte on an average salary of $97,604. Their numbers are strong at 601,000 with a predicted growth rate of 12 percent.
• At the top of the heap are Software Developers who enjoy the highest median salary at $101,790. They also have the highest expected growth rate pegged at 30.7 percent, and by far the most employment opportunities currently totaling 849,230.

So, the good news is that computers continue to be the dominant species on the planet, and those who tend to them are generally well compensated. But although those employed in the service of computers dutifully pay their taxes, their employers, all too often, do not.

Of all the lies the government routinely tells, perhaps the most egregious has to do with tax reform — a cruel euphemism for shifting the burden downward. Every time our purchasable Congress diddles with the tax code, you can be sure that the rich will get substantially richer, and the rest of us will either have to make up the shortfall, or contend with a non-functional government, crumbling infrastructure, ineffective schools, prohibitive healthcare, gutted federal agencies, soaring deficits, and attacks on social security and like programs.

The Trump tax cut that added a trillion dollars to the national debt and gutted Medicaid, allowed 60 mega corporations to pay no federal taxes at all. Zero. Zip. Zilch. Nada. Let’s start with IBM. A company smart enough to engineer a computer that could beat humans at Jeopardy, is also apparently smart enough to beat humans at tax avoidance. Not only did it dodge paying a single dime toward the running of the country, but it also managed to finagle a big, fat tax rebate from all those middle-class dupes who keep paying. The Institute on Taxation and Economic Policy reports that on $500 million in U.S. income, IBM received a federal income tax rebate of $342 million. Consider: IBM spent just under $5 million on lobbying efforts last year. Where else can you get a $342 million dollar return on a $5 million dollar investment?

It’s obscene that a janitor working at IBM pays more taxes than the company does. But IBM is just a second-string tax avoider when compared to Amazon. The retail giant reported a whopping $11 billion in U.S. income, but paid no taxes at all while claiming a rebate of $129 million.

Another 58 other profitable Fortune 500 companies also kicked American workers in the groin. And while these companies will be quick to point out that the tax loopholes they enjoy are not illegal, many certainly stretch ethical boundaries and are unconscionable. The ability to purchase favorable treatment does not exempt corporations from responsibilities to the nation in which they thrive.

Ironically, corporations have a statutory tax rate of 21 percent – lower than an IT professional. But after a little financial alchemy, such as claiming deductions for stock options, tax credits, fossil fuel subsidies, accelerated depreciation, and other unmitigated bullshit, miraculously dreck turns to gold! They owe nothing and we owe them! One of IBM’s write-offs was the vague but apparently lucrative “domestic incentives” exemption which, by itself, managed to reduce IBM’s income tax by about $110 million last year. I’d be stunned if “domestic incentives” didn’t include executive bonuses.

In the social sciences there is a quandary called the Free Rider problem. Free Riders are people who benefit from public resources, infrastructure, and services but do not pay for them. Corporations are the virtuosos of Free Riding. They not only privatize their profits, they also socialize their costs.

It should not escape the attention of the clever architects of tax evasion that this country is getting angrier. Those who rule it think they can direct it to their advantage, but anger is a volatile and unpredictable thing. As they sit in their board rooms and plan their next round of obligation avoidance they should consider that, sometime soon, it may prove harder to avoid the mob than it is to avoid paying taxes.