When tax money is used for schools, health care, or public housing Republicans call it big government. When the money is spent on the military they call it national security. When the money falls short service get cut and people suffer.
According to Oxfam, the global 1% commands more wealth than the rest of us. An Oxfam spokesperson stated that 1.5% of their wealth “could raise $74 billion a year, enough to fill the annual gaps in funding needed to get every child into school and to deliver health services to the world’s poorest countries.”
Five years ago Senator Sanders spoke to Congress about the top ten corporate tax avoiders. The top nine were fossil fuel merchants, bankers, or military contractors. They paid no taxes in 2010. Most received tax rebates that ranged from $124 million (Boeing) to $4.1 billion (General Electric). Many of these companies had received bailouts following the 2008 economic collapse. Now that’s gratitude for you.
Multi-national corporations stash cash overseas in tax havens. Tax havens are jurisdictions with low or non-existent taxes. They usually have finical security laws to limit disclosures of transactions. 362 of the Fortune 500 companies, 72%, use tax havens.
Ugland House is a five story building in the Cayman Islands that is the registered address for 18,857 companies. Their only physical presence in the Cayman’s is a post office box. In 2010, U.S. controlled subsidiaries in the Cayman Islands reported $51 billion in profits on an island whose GDP was $3 billion. That’s 1600% of the Cayman’s GDP.
The offshore tax sheltered economy is between $22 – $33 trillion; 10% – 15% of the world’s economy. Most profits from offshore accounts are housed in U.S. banks or finical holdings, but registered in the name of their foreign subsidiary. In 2010 American multi-national corporations reported earnings of $505 billion in twelve tax havens.
Another form of money hording is tax inversions. With a tax inversion one company buys a rival in a country where there are lower taxes and moves there. They don’t really relocate, if they hold a few meetings there they qualify. When Pfizer merged with Allergan last November they reduced their tax rate from 25% to 17%. Then their bookkeepers performed earnings stripping where the merged corporation loads the American part of the company with debts owed by the foreign company. Interest payments on debt are tax deductible, officially reducing American profits and lowering their taxes. Under current tax law earned foreign profits are not subject to U.S. taxes until the money comes home. The money never comes home even when the profits are earned here. It’s estimated that tax inversions will cost the U.S. government $60 billion a year every year for the next decade. These foreign corporations include Apple, Johnson & Johnson, and Goggle. In 2011 Microsoft shifted 47% of profits earned in the U.S. to subsidiaries in tax havens overseas. Eli Lilly parked $20.6 billion overseas thereby avoiding all taxes. Now corporate lobbyists want Congress to permanently exempt all foreign profits from taxation. This will encourage further offshoring.
In 2012, $1,359 billion was deposited in overseas accounts. The ten worst offenders were primarily computer and pharmaceutical companies. We lost $367 billion in tax revenue.
There are things we can do. First end deferred tax payments on foreign subsidiaries and have them paid immediately. According to the Joint Committee on Taxation, this could raise $600 billion over 10 years. In addition to that: end the territorial tax systems, stop licensing intellectual property to shell companies in tax havens, treat profits that are managed and controlled in the U.S. as domestic earnings, tax foreign U.S. income when it’s deposited in U.S. financial institutes, internationally standardize how corporations define themselves, reform foreign tax credits on multi-national corporations, and increase transparency. These actions would challenge the plutocracy and help restore democracy in America, which is precisely the point.
Sources: Democracy Now 11/13/15, Citizens for Tax Justice 6/4/14, 3/11/13, Mother Jones 3/29/11, Washington Post 2/12/15, The Guardian 11/23/15, Censored 2016 © Huff & Roth, Plutocrats © 2012 Chrystial Freeland
Rebel Fagin writes for the Sonoma County Peace Press and gcml.org
