Congress might be poised to kowtow to corporate offshore blackmailers again, according to Reuters News Service:
Democrat Barbara Boxer of California and Republican Rand Paul of Kentucky called for allowing businesses to pay 6.5 percent corporate income tax on foreign profits brought into the country from overseas, instead of the current 35 percent rate, which they largely avoid.
Seriously, this offshore tax holiday bullshit again? Do we learn nothing from past mistakes? As the Center for Budget and Policy Priorities reports:
A tax holiday enacted in 2004 failed to produce the promised economic benefits. The evidence shows that firms mostly used the repatriated earnings not to invest in U.S. jobs or growth but for purposes that Congress sought to prohibit, such as repurchasing their own stock and paying bigger dividends to their shareholders. Moreover, many firms actually laid off large numbers of U.S. workers even as they reaped multi-billion-dollar benefits from the tax holiday and passed them on to shareholders.
Americans for Tax Fairness reports:
Multinational corporations are holding roughly $2 trillion in profits offshore – much of it in tax havens to avoid paying U.S. taxes. These corporations are costing U.S. taxpayers about $100 billion every year in lost revenue.
When corporations don’t pay their fair share of taxes, the rest of us must make up the difference. Here’s how much a handful of these corporations would likely owe in taxes if they brought those profits home:
- Apple: $26 billion
- Microsoft: $19.4 billion
- Amgen: $7.9 billion
- Eli Lilly: $7.3 billion
- Oracle: $6.3 billion
- Dell: $6.2 billion
Now consider this: In a 2013 Senate subcommittee hearing, Apple CEO Tim Cook claimed: “We pay all the taxes we owe, every single dollar.” As Forbes reported at the time:
Apple, one of the world’s most valuable companies, was asked to testify about its tax programs as part of the subcommittee’s ongoing look into corporate tax loopholes.
The bi-partisan committee, headed by Carl Levin (D-Mich.) and John McCain (R-Ariz.), said its investigation found that Apple has shifted billions of dollars in profits away from the U.S. and into Ireland, where the maker of iPhones and iPads has negotiated a special corporate tax rate of 2 percent or less. The subcomittee said yesterday that Apple has avoided paying taxes on $44 billion in overseas earnings that should have been taxed in the U.S. over the past four years.
While Apple paid almost $6 billion in taxes last year, the company also shifted $36 billion in taxable earnings away from the U.S. in 2012 and avoided a payment of $9 billion, Levin said. That translates into avoiding $1 million an hour in taxes, or $25 million a day, he said. “Apple wants to focus on the billions in taxes it has paid. But the real issue is the billions in taxes it has not paid.”
In a rather humorous/ironic twist, Senator Rand Paul, one of those calling for this latest get-out-of-jail-free-card for tax dodgers:
…accused his colleagues of trying to “vilify” Apple. Paul said the committee should “apologize” for forcing Apple to sit through a “show trial” and for having to cope with “a bizarre and Byzantine tax code.” “Money goes where it’s welcome,” Paul said, calling for comprehensive U.S. tax reform. “Frankly, I’m offended by the tone and tenor of this hearing…I’m offended by a $4 trillion government bullying, berating and badgering one of America’s greatest success stories.” (emphasis mine)
Poor little multimillionaire; I sympathize, don’t you?
There is a tax myth repeated ad nauseum by the Right and their “think tanks” like the Heritage Foundation that claims U.S. corporations pay the highest tax rates in the world. This myth has been debunked numerous times, and yet it remains a mantra on the Right. The corporate tax rate is supposedly 35% on U.S. profits; but, as Citizens for Tax Justice pointed out in their report The Sorry State of Corporate Taxes:
The report looks at the profits and U.S. federal income taxes of the 288 Fortune 500 companies that have been consistently profitable in each of the five years between 2008 and 2012, excluding companies that experienced even one unprofitable year during this period.
Some Key Findings:
• As a group, the 288 corporations examined paid an effective federal income tax rate of just 19.4 percent over the five-year period — far less than the statutory 35 percent tax rate.
• Twenty-six of the corporations, including Boeing, General Electric, Priceline.com and Verizon, paid no federal income tax at all over the five year period. A third of the corporations (93) paid an effective tax rate of less than ten percent over that period.
• Of those corporations in our sample with significant offshore profits, two thirds paid higher corporate tax rates to foreign governments where they operate than they paid in the U.S. on their U.S. profits.
This is a breakdown of U.S. tax revenue for 2013:
Now, I agree the tax system is a mess, so let’s fix it; lower the corporate tax rate, but eliminate all tax write-offs. Americans shouldn’t have to subsidize a company’s R&D, corporate jets, re-investment, etc.; if “they built that” then they can pay for their own costs of doing business. And stop letting billion dollar corporations call themselves small businesses, it’s an insult to true small business.
Let’s simplify the individual income tax while we’re at it, and stop allowing the wealthy to pay less taxes for doing nothing than those who actually work.
But most of all, let’s stop allowing big corporations and the rich to shirk their responsibilities, then blackmail America to get out of paying what they owe.
crossposted @ All Things Democrat