If you watch TV at all, you have undoubtedly been assaulted by the ad in which an irritating little man in the GREEN (How subtle can you get?) bow tie screaming that mantra. It is a great idea, only it is directed at the wrong target. To hit the right target, read LEGALIZED TAX FRAUD: HOW TOP US CORPORATIONS CONTINUE TO PROFIT THROUGH OPFFSHORE TAX HAVENS, a report from Senator Bernie Sanders, ranking minority member of the Senate Budget Committee. If it doesn't galvanize you to demand real corporate tax reform, check your pulse to make sure that you are still alive.
The data in the report is based on a study of the Business Roundtable (BRT), a coalition of the CEOs from 201 of the nation's wealthiest corporations, who are, among other atrocities, on record for raising the eligible age for Social Security and Medicare to 70, cutting The benefits of both programs, lowering the corporate tax rate (its true that the US rate is one of the highest in the world, except that almost nobody even comes close to paying at that level. In fact, as this study blatantly documents, some corporations don't pay any income taxes at all!!), and adopting a "territorial" tax system that exempts their offshore profits entirely.
At least 111 0f the 201 use offshore tax havens to avoid paying some $280 billion in taxes on assets of $1,000,000,000.
Twenty-one of these corporations have disclosed that if they brought their collective $235 billion in offshore profits to the US, they would owe taxes of $65 billion--28 % of the total. THE REST OF THEM DO NOT DISCLOSE THIS INFORMATION.
Since they are allowed to deduct whatever income taxes they have paid to foreign governments, they are paying these tax haven levies at a rate of about SEVEN PERCENT.
At least 81 of these BRT corporations who are supposed to pay US federal corporation income taxes have been profitable for five years and yet almost none are paying anywhere near the official rate of 35%. From 2008 through 2011, these 81 companies have received a total of $188 billion in tax breaks--the difference between the 35% that they should have paid and what they actually paid. They have actually paid US corporate income tax at an average rate of 18.1 percent--slightly more than one-half of what they should have paid.
Several of these "fortunate" 81 BRT corporations--American Electric Power, Boeing, Corning, Duke Energy, General Electric, the Interpublic Group. NextEra Energy, PG&E Corporation, Tenet Healthcare, and Verizon--HAVE ACTUALLY RECEIVED REFUNDS!!
111 of these BRT corporations have disclosed ownership of subsidiaries in countries designated by the Government Accountability Office as "offshore tax havens." Most are banks, technology, and pharmaceutical companies, but the list also includes Catepillar and other manufacturers.
Many of the rest are highly profitable "C companies," which are required to pay US corporate income taxes, but which actually manage to avoid paying most of the statutory 35 percent. That list includes manufacturers, energy companies. utilities, and FedEx.
The report describe the profits earned by many BRT corporations as "officially" held overseas "because much or most of their profits are actually earned in the US or other countries where actual business is being carried out and then manipulated through accounting principles so that they appear to be earned in countries with no corporate income tax at all." They claim to generate more profits in tax havens, MANY OF WHICH ARE TINY COUNTRIES WITH VERY SMALL POPULATIONS AND MUCH HIGHER PROFITS THAN COULD POSSIBLY BE EARNED THERE." One of the most egregious examples are corporations is Bermuda, where BRT companies regularly report to the IRS earnings "EQUAL TO 16 TIMES THE ENTIRE GROSS DOMESTIC PRODUCT OF Bermuda." The profits they report to earn in the Cayman Islands "EQUAL 20 TIMES THE GDP OF THAT TINY COUNTRY." Countries like Ireland, the Netherlands, and Luxemburg "provide LOOPHOLES AND SPECIAL DEALS so that profits can be moved through them and into the zero-tax countries like Bermuda and the Cayman Islands."
N.B. This report relies on data compiled by the US Public Interest Research Group and Citizens for Tax Justice from companies' public filings with the SEC comparing disclosed offshore subsidies with the list of tax havens used by the GAO in its 2008 report. Companies are required to disclose only "significant subsidiaries," so many have stopped revealing 99% of their subsidiaries, rather than actually shutting down or divesting them.
Despite claims by the BRT that lower taxes will provide investment and job growth, "THERE IS NO EVIDENCE THAT CORPORATIONS WITH LOWER TAX BILLS CREATE MORE JOBS THAN THOSE WITH HIGHER TAX BILLS." A December 2013 report by the Center for Effective Government compared 30 of the higher taxed corporations with 30 of the lowest taxed and "found that the high-tax group created almost 200,000 jobs between 2008 and 2012, while the low-tax group collectively REDUCED EMPLOYMENT BY 51,999 JOBS." The "clear winner" is VERIZON, which has eliminated 62, 338 jobs since 2008, despite having an effective income tax rate of TWO PERCENT!
The remainder of the report is a detailed analysis of each of the BRT companies taking advantage of offshore tax havens, ranging in alphabetical order from CITIGROUP to THE WILLIAMS COMPANIES, INC, revealing each one's taxpayer bailout from the Federal Reserve and the Treasury Department during the financial crisis of 2008 to 2011, its number of subsidiaries in offshore tax havens in early 2014, its profits officially held offshore by that date, and the amount of federal income tax each would have to pay--at 27 percent--if those profits were brought to the US. Each example concludes with the charge that "there is strong EVIDENCE that many American corporations are simply choosing NOT to disclose as many of these subsidiaries as they had in the past."
For those who prefer to ingest their poison in tabular form, there is a four-page appendix detailing that information for each of the BRT companies.
If you have not yet filed your 1040 forms for 2014, I would recommend doing so before reading this report. Afterwards, you probably won't want to.
Keep on keeping on, JDB