Presto Change-o Tax Avoidance
If you want a quick and sure way to determine how honest a business leader might be, ask about U.S. corporate taxes. If that leader insists that taxes are killing competitiveness and snuffing out business in this country, you’ve got a shill in front of you. The Chamber of Commerce line that cutting taxes on business will create jobs has been thoroughly disproved during the eight years of right wing control of all branches of government.
Anyone actually in business will know that while the tax rate is high, multiple loopholes render the taxes on corporations almost nonexistent, and actual taxes paid by business form a small proportion of the total tax dollars the U.S. collects.
Right now, through offshoring profits while taking deductions for expenses inside the U.S., several of our highest earning businesses pay practically no taxes in this country at all.
Google’s income shifting — involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” — helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.
The U.S. National Science Foundation funded the mid-1990s research at Stanford University that helped lead to Google’s creation. Taxpayers also paid for a scholarship for the company’s cofounder, Sergey Brin, while he worked on that research. Google now has a stock market value of $194.2 billion.
“You accumulate profits within Ireland, but then you get them out of the country relatively easily,” Stewart (senior lecturer in finance at Trinity College’s school of business in Dublin) said. “And you do it by using Bermuda.”
Eoin Dorgan, a spokesman for the Irish Department of Finance, declined to comment on Google’s strategies specifically. “Ireland always seeks to ensure that the profits charged in Ireland fully reflect the functions, assets and risks located here by multinational groups,” he said.
Once Google’s non-U.S. profits hit Bermuda, they become difficult to track. The subsidiary managed there changed its legal form of organization in 2006 to become a so-called unlimited liability company. Under Irish rules, that means it’s not required to disclose such financial information as income statements or balance sheets.
“Sticking an unlimited company in the group structure has become more common in Ireland, largely to prevent disclosure,” Stewart said.
Technically, multinationals that shift profits overseas are deferring U.S. income taxes, not avoiding them permanently. The deferral lasts until companies decide to bring the earnings back to the U.S. In practice, they rarely repatriate significant portions, thus avoiding the taxes indefinitely, said Michelle Hanlon, an accounting professor at the Massachusetts Institute of Technology.
U.S. policy makers, meanwhile, have taken halting steps to address concerns about transfer pricing. In 2009, the Treasury Department proposed levying taxes on certain payments between U.S. companies’ foreign subsidiaries.
Treasury officials, who estimated the policy change would raise $86.5 billion in new revenue over the next decade, dropped it after Congress and Treasury were lobbied by companies, including manufacturing and media conglomerate General Electric Co., health-product maker Johnson & Johnson and coffee giant Starbucks Corp., according to federal disclosures compiled by the non-profit Center for Responsive Politics.
While officers of profitable businesses use their earnings in the U.S. to lobby against taxpayers, they take their earnings here abroad. The constant pilfering of companies’ operations here are turned into weaponry against the very citizens whose disposable incomes they depend on for their high earnings.
‘Alternative’ news source CNS – founded to offset fact gathering that was detrimental to right wing goals – lays one practice bare.
The reality is: Marginal effective tax rates drive investment flows. Mintz and others have illustrated that relationship statistically, but you need only look at individual companies to see the effects of taxes. It is no secret, for example, that Intel Corporation is able to cut its tax bill substantially when it builds new semiconductor plants in China rather than in the United States.
Earning high profits from business in the U.S. only makes them mad.
Business attitudes have evolved into law of the jungle, and the U.S. that has always been the goal for sales at high profits has received no loyalty, no sense of responsibility, from the business community that chases profits at the expense of its host country.
Predatory practices that used to be detrimental to third world countries have become standard to corporate welfare seekers from U.S. coffers. Tax shelters are their answer to the benefits, and concessions, they’ve been given by our government. Now it’s time to end that approach, and bring profits back where they belong. The taxpayer doesn’t have an obligation of charity toward the businesses made possible by hard work here at home.