Massive corporations are cheating us out of trillions of dollars that our infrastructure desperately needs. And none of it is illegal.
Originally published by the Other98.
Crumbling bridges, abandoned schools, stalled plans for green energy—name a problem with American infrastructure, and someone will tell you the issue is a simple lack of funds.
Too many pressing concerns, not enough tax dollars, right?
There are a jaw-dropping $2.5 trillion in U.S. corporate profits booked offshore. Collectively, these companies booking those taxes already owe more than $700 billion more. And as much as $111 billion in additional taxes are lost every year.
Given needed investments in education, infrastructure, a transition to a clean energy economy and more, you might think Congress would be anxious to reclaim the money.
Proposals now circulating in Congress double down on loopholes that facilitate the gaming of the tax code by a relatively small number of extremely large, profitable and well-connected finance, pharma and tech companies.
Companies, like individuals, are supposed to pay taxes on their earnings. If you or I make money in Des Moines or Dublin, as U.S. citizens, we pay income taxes on all of it. But if you are a multinational company, you divide yourself into parts (e.g. Goldman Sachs has 987 subsidiaries in tax havens), locate at least one part in a tax haven and claim profits were earned there.
Consider that there is a modest five story building in the Cayman Islands, a notorious tax haven, that serves as the headquarters to more than 19,000 multinational corporations. How do they all fit? Not a single employee of any of the companies registered to that address actually works there. None of these companies make or sell anything in the Cayman Islands. And, yet, billions in annual profits are booked to this address through clever accounting gimmicks.
These companies earn money here, but say it’s earned there. Explain it to a child and even they can recognize – that’s cheating. But what if the law says it’s not? That’s legalized cheating.
It’s not just that these companies are dodging taxes; they’re dodging taxes while taking advantage of a boatload of benefits that are paid for with our taxes. These companies recruit from our colleges and universities, they move goods using our roads and ports and airports, they are protected by our laws and our military, have open access to our markets and they pay next to nothing for it.
One well-known profitable company, GE, over a recent ten-year period had a negative tax rate thanks to roughly 900 tax attorneys and gaping offshore tax loopholes. That means, in essence, GE got a refund on taxes it did not pay.
All you need to know about the current House tax plan is that GE is lobbying in favor—because they figured out that they will do even better.
Another proposal in Congress would allow companies to bring back their offshore profits at the obscenely low tax rate of 8.75%—a 70% discount. That’s less than even the 10% tax rate proposed by Donald Trump.
For context, both these rates —to be paid by profitable multinational companies—are lower than the proposed rate in the House plan for families making $30,000 per year.
It is unfair and it is harmful. One recent study found that we are sending significant numbers of children to unsafe schools across the country with asbestos and mold problems, faulty lighting, insufficient working toilets and more. Our nation’s supplemental food program is down to $1.40 per person per meal and further cuts have been proposed. The stories of real need are too numerous to list.
We need serious corporate tax reform that ends the gaming. It isn’t that complicated.
Congress should close the one loophole that allows the tax-free offshoring of profits. Make corporations pay what they owe, when they owe it, on all their earnings. That’s how you and I pay our taxes.
No more special treatment. Let’s make it illegal to cheat.
Gary Kalman is the executive director of the FACT Coalition
Originally published by the Other98.