Corporate Tax Cheaters
April 15 is right around the corner and like most Americans I am struggling to fill out all the elaborate forms and all the confusing formulas the IRS has for figuring out how much to deduct or how much to pay (e.g., multiply this figure by .02 or that figure by .065 or whatever). I will end up writing a check to the IRS.
Which raised some obvious questions, such as: Where does this money eventually end up and why do so many corporations and the super-rich pay little or no taxes at all?
A Google search reveals a great deal as do various books and research articles. Where does the money go? Not to the poor that’s for sure. Few tax dollars end up filtering downward. Most of it heads upward, to big corporations in the form of “corporate welfare” (estimates range from $92 billion to $125 billion per year), not to mention the estimated $1 trillion in the form of recent bailouts of American corporations. Then there is the astronomical amount going to the Pentagon, which in turn hands out billions to private contractors in Afghanistan, Iraq and elsewhere. One recent analysis found that the actual cost of “national security” tops $1.2 trillion.
As for those who pay little or no taxes at all, I don’t have enough space to cover this subject (it would take a book-length manuscript at least). Here are some recent examples:
· One expert recently stated that “we’re losing out on upwards of $100 billion every year in lost revenue because of corporate tax dodging and overseas tax havens.” He also noted that Bank of America has 115 overseas subsidiaries where they can hide their profits. Further, he noted that “Verizon hasn’t paid taxes on $2.4 billion in income for the past few years,” mostly because of the connection with a foreign company called Vodafone.
· A report in Forbes Magazine noted that in 2009 “General Electric ( GE - news - people ) generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion.” The writer of this report also noted that “companies are keeping some $28 billion a year out of the clutches of the U.S. Treasury by engaging in so-called transfer pricing arrangements, where, say, Microsoft's ( MSFT - news - people ) overseas subsidiaries license software to its U.S. parent company in return for handsome royalties (that get taxed at those lower overseas rates).”
· Bank of America paid no taxes on $4.4 billion in income.
· A Huffington Post report noted that “A Senate report estimated in 2008 that the United States loses up to $100 billion a year in tax revenue to offshore tax havens.” The “Public Interest Research Group” has presented “a state-by-state breakdown of the cost to taxpayers of tax revenue lost to ‘shell companies and sham headquarters’ in places like Switzerland and the Cayman Islands.” Further, a study by the Government Accountability Office(GAO) “found over 80 percent of the hundred biggest U.S. companies took advantage of tax havens.” For example, they found “one five-story building in the Cayman Islands, known as the "Ugland House," contained 18,857 registered businesses, very few of which had anything but a P.O. box there. Bailout beneficiaries Morgan Stanley, Citigroup, and Bank of America boast over 300 subsidiaries in the Cayman Islands.”
· Congresswomen Marcia Fudge recently reported on corporate tax dodgers and noted that what they do is perfectly legal.
Here’s what is bothering me the most – and something that should cause citizens to rise up together in anger – virtually every state is suffering huge budget deficits and politicians constantly claim that we have no money and therefore need to cut wages and benefits, etc. The report in the Huffington Post noted above provided a chart put together by the Public Interest Research Group showing an estimate of each state’s share of the $100 billion tax burden shifted to the states. In other words, this is money corporations should have provided but did not and instead state taxpayers have to pay. For my state of Nevada it comes to about $652 million; for Wisconsin the amount is $1.6 billion; for California ranks number 1 at about $11.7 billion.
The rich get richer and the rest of us have to “share the burden.”
A commentary by Chris Hedges included the following:
"A fourth of the country’s largest corporations—including General Electric, ExxonMobil and Bank of America—paid no federal income taxes in 2010. But at the same time these corporations operate as if they have a divine right to hundreds of billions in taxpayer subsidies. Bank of America was handed $45 billion—that is billion with a B—in federal bailout funds. Bank of America takes this money—money you and I paid in taxes—and hides it along with its profits in some 115 offshore accounts to avoid paying taxes. One assumes the bank’s legions of accountants are busy making sure the corporation will not pay federal taxes again this year. Imagine if you or I tried that."
Hedges quotes Kevin Zeese, the director of Prosperity Agenda, as follows: “If Bank of America paid their fair share of taxes, planned cuts of $1.7 billion in early childhood education, including Head Start & Title 1, would not be needed,” Zeese pointed out. “Bank of America avoids paying taxes by using subsidiaries in offshore tax havens. To eliminate their taxes, they reinvest proceeds overseas, instead of bringing the dollars home, thereby undermining the U.S. economy and avoiding federal taxes. Big Finance, like Bank of America, contributes to record deficits that are resulting in massive cuts to basic services in federal and state governments.”
© 2011, Randall G. Shelden. All rights reserved. No part of this may be reproduced without permission from the author.