A Wall Street Journal editorial “A Global Revenue Grab” (July 23, 2013) paints powerful, profitable corporations as victims of a system that affords them the best of all worlds in terms of taxation.
This article was originally published by The Wall Street Journal.
To the Editor:
Your editorial “A Global Revenue Grab” (July 23) presents misleading and selective data that paints powerful, profitable corporations as victims of a system that affords them the best of all worlds in terms of taxation.
Corporations around the world have enjoyed record-high profits and record-low contributions to government revenues. These corporations enjoy the same protections and benefits of doing business in their “high tax” countries as the citizenry. That is in addition to the research and development credits and myriad other subsidies the corporations receive from their governments.
According to a Congressional Research Service report, in 2008 American multinational companies reported earning 43% of their $940 billion in overseas profits in five tax-haven countries, even though only 4% of their foreign workforce and 7% of their foreign investments were in these countries.
The countries that institute a territorial system or lower their rates do so at the expense of common citizens through sales taxes and value-added taxes, cutting basic services, closing schools and cutting jobs. In many of these same countries, unemployment is at record levels.
The effective corporate tax rate for large, U.S. multinational corporations is 12.6%, according to a GAO report. This is a result of artificially shifting income to tax havens, not a reaction to a specific baseline. The rate is irrelevant; what is important is the ability to use abusive transfer-pricing schemes to dramatically lower your firm’s tax burden on paper.
The premises in the editorial distort rational economic arguments for true competition and growth. It is not hard to see who is really grabbing the money.
Nicole Tichon
Director
Financial Accountability and Corporate Transparency Coalition
Washington
This article was originally published by The Wall Street Journal.