Corporate Tax Havens or Advantaging Loopholes in U.S. Law That They Paid For?
by jhwygirl
CBS news 60 Minutes still does some really good investigative pieces – still knocking on doors, getting shut out and yelled at and all that good stuff.
This week, Leslie Stahl had the tough work of heading to Zug Switzerland, a town about half the size of Missoula. Zug is a rising corporate tax haven, with I-forget-how-many U.S. corporations headquartered there despite the fact that an overwhelming majority of their employees are in the United States, as is their CEO’s and chairpersons and board members
If you have the time, take the 13 minutes or so to watch this segment. It’s worth it, especially if you need to get some blood moving.
A shorter piece has economist Martin Sullivan explaining how U.S. corporations are shifting their profits overseas. Sullivan knows tax policy, having worked in the the Treasury and on the staff of the Joint Finance Committee. He is also an advocate for a airer, simpler, and more economically efficient tax system.
Because, you see, it is all about profit and the stockholders. Patriotism, duty and pride in country have nothing to do with what a corporation’s function or goal would be.
And don’t get me started on moral obligation.
Maybe the stockholders should provide the infrastructure and military power to these corporations here in the good old secure and militarily stable U.S of A. – you know, the one’s benefiting from these corporations.
Me? I’m tired of my tax dollars subsidizing the wallets of a select few and their stockholders.
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4&20 blackbirds 
March 28, 2011 at 6:35 pm
just as long as US military is never used to to protect these cheap bastards. if they get in trouble we should tell them to call the Zug army, navy and air force. we pay tax dollars to support this country. corporations support nothing. how long is it gonna take before americans get sick and tired of this crap and start kicking ceo ass and taking numbers.
March 28, 2011 at 8:31 pm
They operate here in our country, pb…they benefit from our mighty military every day they open their doors.
It’s ridiculous and unfair to every citizen taxpayer to have a system where the standard is that if you employ someone you don’t have to pay taxes. Not only do they not have to pay taxes – these huge corporations – we write laws that give these schmucks a refund.
Someone has to pay. That means us – and this philosophy is mirrored in the legislature where the GOP has continually called to cut cut cut eliminate eliminate eliminate business taxes and all that has gotten as the rate has crept down was higher taxes on montana property owners.
Anyways…my point is that they already benefit from the US military – just like you and I do. Difference is, you and I pay taxes.
March 28, 2011 at 7:10 pm
DemocracyNow! had a segment today on tax cheats like Bank of America.
March 28, 2011 at 7:35 pm
So we shouldn’t protect companies that bail on high taxes, over regulation, and greedy unions.
But it’s OK to protect the free flow of oil to Europe by involving ourselves in Libya.
What you fail to realize is that these corporations have millions of stockholders. I thinking if you have any kind of pension you own their stock.
But hey, let them twist in the wind. Europe needs oil.
March 28, 2011 at 9:18 pm
From the NYT:
“The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States. Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.
By the time the measure — the American Jobs Creation Act — was signed into law by President George W. Bush in 2004, it contained more than $13 billion a year in tax breaks for corporations, many very beneficial to G.E.
While G.E.’s declining tax rates have bolstered profits and helped the company continue paying dividends to shareholders during the economic downturn, some tax experts question what taxpayers are getting in return. Since 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment. In that time, G.E.’s accumulated offshore profits have risen to $92 billion from $15 billion.”
March 28, 2011 at 9:20 pm
government subsidized job loss.
March 28, 2011 at 8:02 pm
What’s coming up in my circles is forming a ‘Grand Jury’ to investigate BANKS. GJ hasn’t had fruition in our leading cause, Impeachment of the Bush Crime Family and Prosecuting the Architects of Torture… some how the concept surfaced and perhaps taking down some Big Corporations/Wall Streeters
Definitely a departure but none the less important…we’d gladly pick up the Guidon if Grand Juries started getting any kind of traction. We are assessing the opportunity …
The Question would be how do we go about convening a Grand Jury of the Banking Industry/Banks? First we’d search for anyone who has a Banking Complaint or felt ripped off by the bank. While developing a strategy…
Getting traction anywhere to purge these Capitalist Bonds would be worth supporting.
March 28, 2011 at 8:28 pm
This move should surprise NO ONE. These corporate bigwigs have seen the writing on the wall – the same writing on the wall I have been talking about for over a year. You can’t fix our current financial issues by just cutting spending. Even if the Repubs succeed in cutting 100 billion from the current budget, that 100 billion will only pay 1/3 of our INTEREST payment on our debt. You read that correctly… 1/3 of our interest payment. That means that even if they cut 100 billion of our spending, our actual debt INCREASES over 200 billion.
It is a simple equation – Government Spending (the budget) + Our owed payment on the debt we already have = our Revenue (Taxes). To balance that equation, Revenue (Taxes) MUST be addressed. It is only a matter of time till that happens (or we go bankrupt) and these fatcats want their money safe from the upcoming bloodletting. They have sucked as much marrow from the bones of America as they can, now they will let us fight over the carcass.
I made a couple of posts at my own blog about this very subject today. Expect to see a LOT more companies “diversify” themselves to other countries – specifically, countries that we can’t tax them in.
March 28, 2011 at 9:30 pm
So by addressing taxes (I’m thinking that means raising them) the rich and their companies will stay and pay up?
By Associated Press
SPRINGFIELD — Two major Internet retailers followed through Friday on threats to cut ties with Illinois businesses over a new law requiring them to collect sales taxes.
Amazon.com Inc. and Overstock.com Inc. both announced they’re dumping Illinois-based “affiliates” — people and businesses that refer customers to the Internet giants and then collect a commission on any sales.
Read more: http://www.dailyherald.com/article/20110311/business/110319868/#ixzz1HxIfWaKq
Higher taxes means more leavers, more avoidance.
March 28, 2011 at 9:33 pm
yep, they’ll hold employment hostage, and probably leave anyway. so American workers are fucked. they should just get over it, and accept the neo-feudal future corporate america is threatening them with.
March 28, 2011 at 9:48 pm
Of course they will threaten leaving. I notice that you didn’t include the open threat made by Caterpiller corp to the Governor of the state (that one was obviously a bluff in an attempt to get concessions from the state). I fully expect big business and the fatcats to use every tactic in the book to avoid being taxed (that means less profit and bonuses for them).
And no, I am not necessarily advocating up front tax increases per se. Reagan enacted some of the largest tax increases in the last century and he did it by LOWERING taxes. Yep, you read that correctly. In 1981, Reagan enacted a tax CUT to the wealthy, lowering their tax rate from 70% to 35%. He was hailed as a hero by the ubber wealthy and even the middle class sung his praises. Then, quietly and with little fanfare, he systematically closed loopholes and made it much harder for everyone to cheat on their taxes, resulting in the largest tax INCREASE in a century.
Even Wall Street is admitting that the tax code needs reworked. They are concerned about saying it too loudly, though, because they are afraid of losing their tax shelters and loopholes. With the recent Supreme Court decision on Corporations, many corporations are less concerned about a major tax rework, because they feel they can weild enough political power to come out of it fairly unscathed. I am not so sure of that. I honestly believe that enough people are aware of the wage/tax inequity and are fed up with it enough that they can push their politicians to truly addressing it. I could, of course, be wrong.
It may come down to an actual, overt tax increase too. If it does, expect a lot of high brow, incomprehensible economic gobbledegook to come from Wall Street and Corporations saying increased taxes will “slow recovery” and “discourage business”. It is all smoke and mirrors. If it slows recovery and discourages business, it is because corporations like Caterpiller will use their economic muscle to punish us for raising taxes. In a way, Caterpiller did us a favor. By doing their power play in full view, they have shown us the hand of the greedy/power hungry vampires that American Corporations have become. The next company that tries it will look just that much worse.
March 28, 2011 at 11:20 pm
I watched that same special, and what hit me was – we have the highest corporate tax in the developed world, and yet how much of that can we actually collect?
It seems easy to me – slash the corporate tax dramatically, and then collect the money through taxing very high income executives and the money shareholders make at higher rates. Then, companies can incorporate here, do business here, and the corporation won’t pay taxes, but its owners and executives will.
March 29, 2011 at 12:21 am
As with most things you see on TV, a significant portion of the story was left unsaid. For example, while we have “the highest corporate tax structure in the developed world” we also have the highest number of tax incentives, tax breaks and tax shelters in the developed world. Our tax structure is ponderous even by our over inflated standards. The result is that, while something may appear to be taxed at say 35% on paper, the actual collected tax is actually closer to 7 – 9%. General Electric is an extreme example (they actually recieved more money back from the Federal Government than they paid in taxes resulting in a net profit), but the principle applies to most big corporations. To protect this structure, they hire lobbiests and purchase politicians (like Baucus) to pass legislation that will aid them as well as cover their excesses.
March 29, 2011 at 9:50 am
The more I think about it Castro didn’t want it’s people/companies to flee its borders either.
You could say the same for East Germany. How those policies work out? Did those countries benefit or decline because of travel restrictions?
Wolfinski nails it. Lower the corporate tax rate encourage business and their highly taxed executives to stay put. Dare I say it-repatriate the escapees with tax incentives.
That or continue the death spiral.
March 29, 2011 at 10:30 am
Horse Manure. These vultures will take your “incentives” (let’s just call them what they are, please – BRIBES) and then screw you over and take their money to ZUG anyway. Reagan’s “trickle down” economics don’t work. They never have. This has been proven time and again. Only the completely blind fall for that propaganda anymore.
You also fail to grasp the severity of the situation. If we continue to lower the tax on big business and the ubber rich because they whine about it or threaten to take their toys elsewhere, the speed with which this country reachs bankruptcy increases and instead of going insolvent in 2020, we end up insolvent in 2018, or 2017. If they want to take their business elsewhere, they can do so – don’t let the door hit you in the ass on the way out. But at the same time, those businesses should not be allowed the protections, support or benefits of being American either.
March 29, 2011 at 10:40 am
Here’s the problem – corporations are inherently slippery. They exist primarily on paper, and they have none the loyalty or non-monetary emotions of a human. They also have a way of making the humans closest to them adopt they bizarre logic – a sort of warped code of chivalry in which ‘shareholders’ become the object of unwavering loyalty even in the face of complete immorality.
But what can you do? Well, we can stop trying to tax the corporations, which are slippery, and tax the people in them, which are a lot more static. Theoretically, corporate profit goes either to employees or shareholders. While a corporation can move to Zug or the Isle of Mann or wherever fairly easily, the shareholders and executives who end up with the profits have motivations besides not paying taxes – they’ll miss the restaurants of New York, or their families, or watching baseball, or macaroni and cheese, or their favorite micro-brew, and they’ll stay in America. Trying to tax corporations seems quite silly when their beneficiaries are so much more easier to keep track of.
Also, we can realize that corporations are thus clearly NOT people, and do something about that legal mess.
March 29, 2011 at 10:33 am
In point of fact, we should be passing financial DIS-incentives for these people to hire workers/move plants outside the US. If Intel or Ford had to pay a “tax” to move one of their research divisions to India or Mexico, they may find it cheaper to keep Americans employed instead of putting 22,000 people out of work in two years.
March 29, 2011 at 11:43 am
Oh that will solve it. More laws leading to more leaving.
And your example-it sucks. All Ford has to do is change it Mexican division to El Fordo. Borrow start up capitol from Ford or better yet borrow from a Mexican Bank with a Ford letter of guarantee.
You see how insidious this becomes? Just over stupid jealousy?
Create barriers, overcome them-the cycle never stops until one day they’re asking for your papers at every crosswalk.
March 29, 2011 at 12:16 pm
i am afraid i have to partially agree with swede here. companies must go elsewhere if tax structures are not competitive with other country’s tax structures because they cannot compete with compainies enjoying lower tax rates.
i also agree with moorcat. we need to simplify our tax structure and eliminate all of the deductions. if we did that, i think a simple 10% real tax on all businesses and individuals above the poverty line in this country would generate more real money for essential government programs and it would bring a gold rush of business not only returning to the united states but investing here.
but that would never get through congress because too many CPA’s, lobbyists, tax attorney’s and corrupt politicians would fight tooth and nail to keep this byzantine system where money is hidden away and stolen by insiders.
found the right spot finally – thanks swede
March 29, 2011 at 1:36 pm
Companies don’t go oversees or to other countries because of taxes. They do it because of Employee costs. A company pays far more for employees than they do for any other single overhead item. Period. Tax incentives and Tax cuts are simply the icing on the cake to most companies.
We trained the people in India to do the jobs (speaking of Intel). We paid for their education, we paid for the equipment and materials and now we are out of a job because they can do it faster, cheaper and, quite frankly better. Now their electronic and computer training is as good or better than ours and they are turning out the next generation of computer geniuses.
The companies don’t care because they got their profits. The people that suffer will be those in this country that follow and want to get into the field. Our Education is more expensive and the jobs are over there now.
March 29, 2011 at 3:21 pm
You are right on Moorcat… they don’t leave for Tax reasons; Hell no almost all of the Multi-national types get massive tax-welfare.
Jack Welch/ GE CEO/Pres was quite forth coming in his view of Labor. He said if he could he’d put all his ‘factories’ on a barge where he would not be bound by any regulations on Worker or Pay.
Imelt is the new pres and really friendly with Max AIG Baucus.
It’s about the wages and salaries not about taxes. The Corporate swine will tell you the “Unions drove them out”
March 29, 2011 at 3:53 pm
congress doesn’t care either. they got their bribes.
March 29, 2011 at 4:24 pm
Then you didn’t read the post or search the links.
It’s all about tax avoidance, whether it’s paper transaction or physically moving people.
Last year companies were surveyed why they left CA. No. 1 reason-taxes.
Maryland installs a “Millionaires Tax-the millionaires leave.
Do I need to restate Amazon and Overstocks reasons again?
March 29, 2011 at 5:21 pm
Apples and Oranges.
The reason companies leave the US is because of labor. The reasons these companies are threatening to leave Illinois is taxes. Unfortunately, for many of them, it is an empty threat. What they hope to gain is some kind of concessions. It is all a numbers game and sadly, the ones that will lose are the workers, state residents and businesses that rely on the businesses throwing temper tantrums.
As far as the companies leaving California, they lost money by leaving. Every worker they put out to pasture cost them money – in fact, more money than “saved” by leaving. That is why there wasn’t a whole sale exodus from the State.
We will see just how many businesses actually leave Illinois (vs how many are threatening). Further, we will see how badly that move hurts them.
March 30, 2011 at 8:25 am
You’re right MC.
Amazon is going down.
March 29, 2011 at 6:46 pm
Is this “Ingemar Johansson” a Republican troll or what? geeeeze dude go play your Lower the Taxes drecht for the Rich multi-nationals. It will never fly in here.
Your Corporate Welfare, redistribution of wealth thru Deregulation and Lower Taxes is why we are in this pitiful Repug Swamp.
Go back where Ayn Rand hides in shame, come back when you can prove Lower/Zero Taxes on Corp/Biz has boosted the QUALITY of Life in America. (dude, it never has and it never will)