Monday, April 8, 2013

MORE OUTRAGE ON CORPORATE WELFARE !


Closing corporate tax havens: The solution to the sequester
By 
4/8/2013
OPEDNEWS
It has been widely reported since at least 2010 that U.S. corporations and the wealthiest Americans have taken advantage of tax loopholes by hiding their assets in offshore subsidiaries (a.k.a. tax havens) in order to avoid paying U.S. income taxes. The amount of money hidden in these tax havens and what the lost revenue means to the American people has not been so widely reported.

According to several sources, including the BBC, the non-partisan Congressional Research Service (CRS) and James Henry, former Chief Economist at McKinsey & Company, the top 1% of wealthiest Americans and corporations have deposited between $21 and $32 trillion in tax havens in order to evade U.S. taxes. The top seven U.S. banks, furthermore, account for over$10 trillion in assets in more than 10,000 overseas subsidiaries.

Assuming these figures are correct, if all of these assets were taxable, then the U.S. could collect billions, perhaps trillions in additional revenue each year.

Data from the Bank of International Settlements (BIS), the International Monetary Fund (IMF), the World Bank, and several governments are used in that assessment. (See video at source). CRS's report focuses on five small countries generally considered to be tax havens (the Netherlands, Luxembourg, Ireland, Bermuda and Switzerland) and compares them to five of the top "traditional" foreign countries where American companies actually do business (Canada, Germany, the United Kingdom, Australia and Mexico).

While any knowledgeable person knows that U.S. multinational corporations engage in tax avoidance by shifting their profits into tax havens, not many know exactly how that is done. The waters are further muddied by CEOs and corporate lobbyists who either deny that outright or use the standard industry mantra: "Our company pays all applicable taxes in every jurisdiction where we operate."

The practice of using tax havens is somewhat simple and is legal under current tax codes, but that does not make the practice morally right or even ethical. Corporations and banks simply need to shift their profits by conducting transactions in countries with little or no corporate taxes. U.S. tax codes allow a "deferral" on paying taxes in the U.S. until the funds are actually brought back to the U.S. and in most cases, they never are.

A classic example of tax haven abuse is the common practice of registering subsidiaries in the Cayman Islands. With more than 85,000 companies registered there, it is one of the few territories in the world that has more organizations than inhabitants.

Mitt Romney's Caymen Island accounts garnered some scrutiny during last year's Presidential election. Facebook sheltered $700 million in the Cayman Islands in 2012, while posting over $1 billion in profits and paying no taxes in the US. In fact, 26 of the 30 largest U.S. corporations that utilize subsidiaries paid no income tax between 2008 and 2011, including GE, Boeing, Verizon, Bank of America and Goldman Sachs. The banks on the list, ironically, were bailed out by U.S. taxpayer money.