BIGGEST TAX SCAM EVER THE BIGGEST TAX SCAM EVER A loophole in the American tax law permits companies with just 20% foreign ownership to incorporate abroad. If a big company acquires a small company located in a tax haven, it can “invert”- that is become a subsidiary of its foreign based affiliate – and kiss a huge share of its IRS obligations goodbye. The cost to the US treasury? Over the next 10 years, inversions could cost the US Treasury nearly $20 billion. These revenues could otherwise pay for Head Start programs, to rebuild roads and bridges, or just bring down the deficit. A recent inversion was Burger King who merged with Tim Hortons and moving their headquarters to Canada. Other multinationals that inverted are California’s Applied Materials, Minnesota’s Medronics, and North Carolina’s Chiquita. Recently, Walgreens backed away from an inversion because of a public outcry. A former White House official said that “Concentrated wealth is buying the agendas it likes and blocking ones it doesn’t.” Using clever accounting schemes, these corporations have siphoned majestic sums out of the country and into tax haven shell companies where the money is untouchable by the IRS. More than $2 trillion in US based multinational profits currently sit in offshore accounts, representing, in excess of $500 billion in unpaid taxes. If that money was deposited in federal coffers tomorrow, it would wipe out the deficit for 2014. When you park a big chunk of money overseas, you get a huge tax break for it. Pfizer provides a prime example. When the company was developing Viagra, it transferred the economic rights to its intellectual property abroad, ultimately to a shell company in Liechenstein- an infamous European tax haven. On each sale of the drug here, the European subsidiary charged the US parent company a steep royalty- the payment of which moved the profit from a high tax America to low to zero-tax Liechenstein. Adding insult to injury, they get a tax deduction in America while they pile up the money in another country tax-free. Also, these untaxed foreign profits are often banked by the offshore subsidiaries in Manhattan, where they’re used to invest in stocks, and US Treasury bonds. The money is already back in the US economy. The biggest names in corporate America are boycotting the US tax system, en masse. Top offenders include: Microsoft ($76 billion), Pfizer ($69 billion), ExxonMobile ($47 billion), Goldman Sachs ($22 billion), Philip Morris ($20 billion), Walmart ($19 billion), McDonalds ($16 billion), Caterpillar ($17 billion), and General Electric ($110 billion). The constant corporate whining that they are overtaxed in the United States is bullshit. Multinational corporations are supposed to pay 35% of profits in taxes. In reality, because of tax loopholes, they are paying about 9% in taxes. The real problem is not that these multinationals are breaking the law, the problem is that the law itself is broken. Two thirds of Americans believe large corporations should be paying higher taxes. 80 percent believe corporate loopholes should be closed. But Washington is not listening. The kid glove treatment of corporate tax offenders by both parties, Republicans and Democrats, is exhibit A in America’s shift from a functioning democracy to a nascent oligarchy. Organized groups representing business interests have substantial impacts on federal decision making. On the other hand, the interests of average Americans have only a minuscule impact on government decision makers. Corporate tax breaks are beloved by those taking advantage of them. Nothing is going to change without realigning a lot of politics. Until that day comes, we will be living with the tax policy that multinationals have bought and paid for. This means for now that the middle class and poor are stuck with the bills.
Posted on: Fri, 05 Sep 2014 03:50:58 +0000
Trending Topics
Recently Viewed Topics
© 2015