TAX AVOIDANCE OF MULTINATIONALS CREATES JOBS OFFSHORE AND MORE FINANCIAL INEQUALITY AT HOME: AVOIDANCE IS ILLEGAL?
With the most profitable American companies hoarding trillions of dollars offshore and creating jobs offshore to avoid taxes at home, no wonder there is so little investment here from the private sector which would create jobs, as well as tax revenue from more incomes – and more consumers here for products. So this is a vicious circle. The controlling issue is Tax Equality, not reform.
The root cause of tax inequalities: U.S. tax rules that provide tax breaks for the ultra-rich and incentives for companies to maximize their earnings, and holdings, of foreign subsidiaries. Bush tax law changes generously allowed companies to not record or pay taxes on profits earned by overseas subsidiaries if the money isn’t brought back to the U.S.
American-based multinational companies are stashing a record $1.9 trillion or more overseas, according to Bloomberg. And businesses are boosting the amount of money they park offshore. Companies including General Electric, Citigroup and Apple shielded more than $229 billion from U.S. taxes in the last year by moving profits made in the U.S. to foreign countries, according to a recent report from Center for Tax Justice. And a September Senate report accused companies like Microsoft and Google of sending money overseas to avoid paying billions in taxes.
- Bush’s 2003 tax-cut package eliminated the long-term capital-gains tax on individuals and couples in the two lowest marginal income brackets – which was of no consequence considering the lowest brackets have no personal disposable income to either save or invest.
- However, for the 1to 2% of Americans with the ability to save enough to invest, the 20 percent capital-gains tax bracket dropped to 15% – which was of significant consequence!
- Qualified dividends shifted from tax treatment as ordinary income into capital gains.
- This is what allowed Romney to have paid at a rate of 15% on a $100M dividend Bain took from one of the companies it loaded up with debt – in order to pay the grotesque “dividend.” Further, remember the company soon afterwards drowned in all the debt, but Bain was gone, and this is called Vulture Capitalism (where jobs have been imploded).
- Changing the taxation of dividend income was described as a benefit to stockholders in public companies who might be living on dividends, but the real purpose was not disclosed, and not explained by the media. (With the huge amounts of corporate profits offshore the ability to pay dividends to shareholders has been greatly reduced.)
- During the Bush years the tax cuts became regressive in the extreme. Regressive means the benefits inured primarily to the highest incomes which correspondingly created the critically dramatic redistribution of wealth to the already wealthy. The job creators are one of the biggest lies of this young century.
- So here we are with U.S. companies making record profits. And trillions of dollars residing offshore, and hardly taxed – is the substance avoidance. Is a law which promotes avoidance a loophole or just wrong!
See the total profits held offshore by 60 big U.S. companies in 2012 and 2011. View Graphics
A Wall Street Journal analysis of 60 big U.S. companies found that, together, they parked a total of $166 billion offshore last year. That shielded more than 40% of their annual profits from U.S. taxes. The 60 companies were chosen for the analysis because each of them had held at least $5 billion offshore in 2011.
- This left the money off-limits for paying dividends, buying back shares or making investments in the U.S.
Big American companies are booking more of their sales in faster-growing foreign markets. But companies also are moving more of their earnings overseas by assigning valuable patents and licenses to foreign units. And because of the low level of investment in America by US corporations, foreign markets are growing faster.
The corporate excuse for companies going offshore is, because U.S. multinational companies are paying less tax on their overseas operations. Offshore subsidiaries of U.S. companies paid an average 14% tax rate in 2008, but in the US the average rate is lower because profits have been shifted offshore.
Congress hides behind the excuse and does nothing to curb tax avoidance for multinationals and the 1%, but if you try to avoidance in your personal 1040 the IRS descends like a ton of bricks onto the 99%. And that is what happened on April 15th!
Americans are patriotic and take paying taxes seriously, but do the multinationals who only complain about tax rates? But what about that GE, a company that earns lots of money making jet engines, many for military planes; so the U.S. Government is GE’s biggest consumer and GE is the biggest avoider:
Military Engines | Military Jets | Military Aviation | GE Aviation
www.geaviation.com/engines/military/Cached From fighters, helicopters and transports to the next generation of unmanned aircraft, GE’s military engines provide the necessary power and reliability for any … J85 – F110 – T58 – F404
This is the sad fact of how Congress supports multinational corporations at our expense. It is time for tax fairness, and time for Americans to know more about what is wrong to fight back. Being under informed allows Congress to get away with this and so all Americans must express their outrage by voting out all members of Congress who do not recognize the unfairness and the enormous redistribution of wealth to the 1% during the last 30 years and fix this terrible problem.
This problem, a leading manifestation of grotesques tax unfairness, can be corrected immediately with appropriate intervention, but only if Americans stop being so lazy about understanding a few simple things about the inequities inherent in the Bush tax changes and how the Teapublican koch-pawns (21st century creationists, pre-Dark Age Thinkers and moralizing bible thumpers), aided and abetted by too many Democrats have not functionally or properly addressed this.
The general mass media is also critically under informed about tax unfairness, so focuses on tragedies like Boston or if the Senate might pass a background check, when the House will not pass what the Senate has such a ludicrous time dealing with. Therefore, citizens must learn more about how they are getting screwed and launch a massive public outcry for tax fairness.
There should have been a major upheaval when Palin, the Teaparty beloved, cried out about how we – “need to stop punishing the job creators.” This should have been a headline everywhere, that was dissected and parsed incessantly to objectively inform Americans who have become confused by always hearing from 2 sides – there is only one side to truth, and the truth is the tax favoritism provided to the creators of offshore jobs must be identified and stopped in its tracks. The media should have sent TV crews to the houses of CEOs of the 60 most egregious offenders to ask about the pain suffered from all the punishment! Cable news could have gone to all the headquarters to question the pain and suffering caused by hiding billions in secret, untaxed, offshore accounts, as well as question if it is difficult to sleep at night while so many millions of Americans might not have unemployment benefits or food stamps as the sequester begins to strangle the most needy.
The job creators celebrate April 15th secure in the knowledge that their level of Tax Avoidance is legal (?) because Congress loves money from their army of mercenary lobbyists, far more than the 99% of us that Congress depends on to pay their incomes so they can screw us.
TAX FAIRNESS WOULD CREATE JOBS BY STOPPING THE OFFSHORE PROFIT DRAIN. ISN’T IT TIME FOR TAX EQUALITY? HAPPY POSTHUMOUS APRIL 15TH ……..
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