At 20:20 07/05/2013, Sally wrote:
What is the justification for these tax breaks? Kind of reminds me (a bit)
of the $3billion plus
that the current government in Ottawa has 'misplaced' at the same time
they cut valuable
social and environmental programs. Sally
There's no reason, of course, so long as we have the present sort of
electoral voting system. It will probably get worse. Those businesses that
have the ear of the President, or the very small group at the tip of
government, will want concessions for themselves, and the politicians can
always makee use of money for elections purposes or retirement ease. I
expect that Obama will retire a very rich man.
Keith
----------
From: Portside moderator [[email protected]]
Sent: Sunday, May 05, 2013 7:07 PM
To: [email protected]
Subject: Dodging Corporate Taxes - Big Time
<http://portside.org>
[]
<http://portside.org/2013-05-05/dodging-corporate-taxes-big-time>Dodging
Corporate Taxes - Big Time
May 5, 2013
That $9.2 billion tax bill that Apple dodged in cooking up a scheme this
week to finance a $55 billion stock buyback for its shareholders would
have been enough to make unnecessary all of the major budget cuts in the
sequester. That's not counting the tax dodges of Bank of America,
Citigroup, ExxonMobil, FedEx, General Electric, Honeywell, Merck,
Microsoft, Pfizer, and Verizon.
[]
Decline of Corporate Taxes as Percent of Federal Revenues 1952-2012,
<http://www.ips-dc.org/files/5975/Corporate%20tax%20dodgers%20-%20graph%201.jpg?width=500>IPS,
The Bite of Apple: Firm Dodges Enough Taxes To Cover Much of Sequester
Corporate Tax Dodgers: 10 Companies and Their Tax Loopholes
The Bite of Apple: Firm Dodges Enough Taxes To Cover Much of Sequester
Isaiah J. Poole
Campaign for America's Future
May 5, 2013
<http://blog.ourfuture.org/20130503/the-bite-of-apple-firm-dodges-enough-taxes-to-cover-much-of-sequester>http://blog.ourfuture.org/20130503/the-bite-of-apple-firm-dodges-enough-taxes-to-cover-much-of-sequester
The scheme that Apple cooked up this week to finance a $55 billion stock
buyback for its shareholders was orchestrated to avoid paying $9.2 billion
in taxes,
<http://www.bloomberg.com/news/2013-05-02/apple-avoids-9-2-billion-in-taxes-with-debt-deal.html>Bloomberg
reported Friday.
That $9.2 billion tax bill that Apple dodged would have been enough to
make unnecessary all of the major budget cuts weve been writing about
this week as part of
<http://blog.ourfuture.org/20130503/blog.ourfuture.org/c/repeal-sequester>our
Repeal the Sequester campaign. With $9.2 billion, the federal government
could have (based on lists compiled by
<http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/20/the-sequester-absolutely-everything-you-could-possibly-need-to-know-in-one-faq/>The
Washington Posts Wonkblog and
<http://thinkprogress.org/economy/2013/04/26/1927581/12-programs-congress-refuses-to-save-from-automatic-spending-cuts/>Think
Progress):
* Paid for rescinding the furloughs of air traffic controllers without
raiding $250 million from an airport improvement fund.
* Restored Head Start funding to avoid having to kick an estimated
70,000 people out of the program this year.
* Kept Meals on Wheels funding for seniors intact.
* Restored National Institutes of Health funding, so that research on
cancer treatments and other diseases could continue uninterrupted.
* Rescinded cuts of up to 10.7 percent in unemployment checks to
people who have been looking for work for more than six months without
success.
* Kept paying for public housing assistance and housing vouchers for
people who might otherwise be homeless or in substandard living conditions.
* Rescinded cuts in programs for children with special needs and
learning disabilities.
* Kept already stretched Occupational Safety and Health inspectors on
the job, doing the 1,200 workplace inspections that are being shelved by
sequestration.
* Fully funded disaster relief programs, a particularly critical need
now that a wildfire is currently causing serious damage in southern
California.
* Restored $480 million now cut from the FBIs operations.
* Kept intact the federal programs responsible for safeguarding our
nuclear weapons.
* Avoided cutting $770 million in various State Department health and
economic aid programs, plus another $650 million in funding for
diplomatic activities.
* Fully funded NASA operations, which would have been a boon to
central Florida and to Texas communities already hurting because of the
end of the space shuttle program.
Apple was able to do this because of
<http://www.policymic.com/articles/7868/apple-icheat-how-the-world-s-biggest-company-also-became-the-most-unethical>techniques
it uses to keep its U.S.-made profits offshore, and because of provision
in the tax code that allows it to deduct interest it pays on money it
borrows. Thats a double whammy: It does not pay the taxes it should on
the money it earns from all of those i-whatevers we buy (including the
Macbook Pro I am using to type this post) and it gets money from the
government when it borrows money from a big bank rather than using the
money from its overseas stockpile.
Apple makes great products, but the obscenity of its use of the tax code
to avoid paying its fair share for the functions of government that make
its success possible is only exceeded by the tax code itself and the nexus
of ideology and corporate greed that created it. This latest news from
Apple underscores the need to
<http://blog.ourfuture.org/20130423/reform-leaders-explain-moves-to-end-corporate-tax-evasion>end
corporate tax evasion not with lobbyist-written schemes like the
territorial tax that would essentially engrave offshore tax dodging into
the tax code but with fair, more progressive tax structures that require
corporations to pay taxes on their earnings just as working people must by
April 15 every year.
Corporate Tax Dodgers: 10 Companies and Their Tax Loopholes
Sarah Anderson, Scott Klinger, Javier Rojo
IPS
April 15, 2013
<http://www.ips-dc.org/reports/corporate_tax_dodgers>http://www.ips-dc.org/reports/corporate_tax_dodgers
A new report looks at 10 U.S. corporations that have used an array of tax
loopholes and corporate subsidies to slash their tax bills: Bank of
America, Citigroup, ExxonMobil, FedEx, General Electric, Honeywell, Merck,
Microsoft, Pfizer, and Verizon.
HIGHLIGHTS OF 10 CORPORATE TAX DODGERS
Bank of America
Had $17.2 billion in profits offshore in 2012 on which it paid no U.S.
taxes. Reported it would owe $4.3 billion in U.S. taxes if profits are
brought home.
Citigroup
Had $42.6 billion in profits offshore in 2012 on which it paid no U.S.
taxes. Reported it would owe $11.5 billion in U.S. taxes if profits are
brought home.
ExxonMobil
Paid just a 15% federal income tax rate from 2010-2012, less than half the
official 35% corporate tax rate a tax subsidy of $6.2 billion. Had $43
billion in profits offshore in 2012 on which it paid no U.S. taxes.
FedEx
Made $5.7 billion from 2010-2012 and didnt pay a dime in federal income
taxes. Got a tax subsidy of $2.1 billion. Received $10.3 billion in
federal contracts from 2006-2012.
General Electric
Made $88 billion from 2002-2012 and paid just 2.4% in taxes for a tax
subsidy of $29 billion. Paid no taxes in 4 years. Had $108 billion in
profits offshore in 2012 on which it paid no U.S. taxes. Received $21.8
billion in federal contracts from 2006-2012.
Honeywell
Made $5 billion from 2009-2012 and paid just $50 million in federal income
taxes a tax subsidy of $1.7 billion. Had $11.6 billion in profits
offshore in 2012 on which it paid no U.S. taxes. Received $16.7 billion in
federal contracts from 2006-2012.
Merck
Made $13.6 billion and paid $2.5 billion in federal income taxes from
2009-2012. Paid an 18.4% federal income tax rate, half the official 35%
rate a tax subsidy of $2.2 billion. Had $53.4 billion in profits
offshore in 2012 on which it paid no U.S. taxes. Received $8.7 billion in
federal contracts from 2006-2012.
Microsoft
Saved $4.5 billion in federal income taxes from 2009-2011 by transferring
profits to a subsidiary in the tax haven of Puerto Rico. Had $60.8 billion
in profits stashed offshore in 2012 on which it paid no U.S. taxes;
reported it would owe $19.4 billion if profits are brought home.
Pfizer
Received $2.2 billion in federal tax refunds from 2010-2012 while earning
$43 billion worldwide even though 40% of its sales are in America. Had $73
billion in profits offshore in 2012 on which it paid no U.S. income taxes.
Received $3.4 billion in federal contracts from 2010-2012.
Verizon
Made $19.3 billion in U.S. pretax profits from 2008-2012 but paid no
federal income taxes during the period; instead got $535 million in tax
rebates. Total tax subsidy: $7.3 billion. Received up to $6 billion in
federal contracts from 2011 through 2023.
CORPORATE TAX DODGERS AND THEIR FAVORITE LOOPHOLES
As the budget battles in Washington continue, corporations have stepped
into the fray with some of
the most aggressive lobbying weve seen in years calling for cuts to
corporate tax rates, a widening of offshore tax loopholes that already
cost the U.S. Treasury $90 billion a year, and cuts to government services
and benefits, including Social Security and Medicare.
In making their case, corporate executives decry the U.S.s 35% corporate
tax rate claiming it is the highest in the world and makes their
businesses uncompetitive globally. The evidence suggests otherwise.
Corporate profits are at a 60-year high, while corporate taxes are near a
60-year low [See Figure]. U.S. stock markets are at record levels, and
American CEOs are paid far more than executives who run firms of similar
size in other nations. Many U.S. corporations pay a higher tax rate to
foreign governments than they do here at home.
Americas 35% tax rate is the highest among industrialized nations, but
very few companies pay anything like those rates. Total corporate federal
taxes paid fell to 12.1% of U.S. profits in 2011, according to the
Congressional Budget Office. The average profitable company in the Fortune
500 paid just 18.5% of its profits in federal income taxes between 2008
and 2010, according to Citizens for Tax Justice, a nonpartisan tax
research organization. Dozens of large and profitable companies paid
nothing in recent years.
CEOs who are the face of various corporate pro-austerity, anti-tax
campaigns with names like Fix the Debt, The LIFT America Coalition, The
RATE Coalition and even the long-standing Business Roundtable, preach a
theory that cutting corporate taxes is pro-growth. But they neglect to
say that the growth is of their corporate bottom lines, not the economy
and certainly not social well-being.
Though many of these austerity crusaders have corporate retirement plans
that will provide tens- and even hundreds of thousands of dollars PER
MONTH in their retirement, these CEOs shamelessly argue for cutting
monthly Social Security benefits and raising the retirement age to 70
which automatically reduces seniors retirement benefits by 20%.
It wasnt always this way. There was a time, not so long ago, when
Americas largest businesses did not question the need for taxes to pay
for investments in education, infrastructure and basic research that
benefited businesses and citizens alike. It was from these investments
that things like computers, the Internet and life-saving drugs and medical
technology emerged in life-changing ways.
In 1952, under Republican President Dwight D Eisenhower, corporate income
taxes were nearly a third of the federal governments receipts but had
declined to less than 10% by 2012. This is due to a corporate tax code
riddled with loopholes, perks and preferences won by corporate lobbyists
and backed by millions of dollars of campaign gifts to Members of Congress.
This report looks at 10 U.S. corporations that have used an array of tax
loopholes and corporate subsidies to slash their tax bills. Here are a few
of the loopholes and subsidies:
The offshore tax loophole. This gaping loophole costs the U.S. Treasury
$90 billion a year by letting corporations ship profits and jobs overseas.
It was originally established to encourage U.S. multinational corporations
to expand their businesses into other countries; for instance, to
encourage car manufacturers to build plants and sell cars in Germany or
England. If profits from those sales were reinvested in new and better
plants overseas, that money would not be subject to U.S. income taxes. But
starting a couple of decades ago, corporate tax attorneys and accountants
found ways to stretch this concept and set up ways for companies to
register intellectual property, such as patents or trademarks, in low-tax
nations, called tax havens.
When a product is sold in America, a chunk of the purchase price is sent
to the tax haven to pay for use of the patent, and these funds escape U.S.
taxes. One of the companies profiled in this report is Microsoft, which
sends 47 cents of every U.S. sales dollar to Puerto Rico to pay for
patents on discoveries largely made in the United States. Pfizer has
turned these tax-avoiding paper transactions into an art form it sells
40% of its drugs here but hasnt reported any U.S. profits in five years.
Merck and Citigroup also benefit from offshore tax loopholes.
The excessive CEO pay tax dodge. This loophole was created in 1993 when
Congress passed legislation seeking to cap the deductibility of executive
compensation to no more than $1 million per year per executive. Companies
could continue to pay whatever they wanted, taxpayers just wouldnt be
subsidizing more than the first $1 million per executive. As the bill
moved through Congress, a loophole was inserted that exempted all pay
considered to be performance based. Rather than reining in pay, the
effect of the law with the loophole intact was an explosion of stock-based
compensation. This loophole costs the U.S. Treasury $8 billion a year.
Honeywell is one of the companys profiled that has used this loophole to
save on its taxes.
The corporate malfeasance tax dodge. When you get a parking ticket or a
speeding ticket, come tax day you are out of luck because such fines are
not tax deductible. But if you are a corporation, the costs of corporate
crimes and abuse are most often tax deductible, in effect forcing other
taxpayers to subsidize their abusive behavior. When Bank of America paid
to settle claims that its foreclosure practices violated the rights of
customers who lost their homes or when ExxonMobil paid $1.1 billion to
settle claims for the Exxon Valdez oil spill, their tax deductions of
these costs meant the rest of us picked up some of the tab for their
harmful practices.
The paying business to do what it would do anyway tax subsidy. Several
companies profiled were able to sharply cut their taxes by taking
advantage of special tax write-offs associated with the 2009 stimulus
bill. Corporations have long been allowed to deduct a portion of the cost
of their property and equipment over the life of the asset. But the 2009
law allowed companies to immediately write-off 50% of the value of the
equipment in the year the purchase was made, regardless of how long the
equipment was expected to last. While the intent of the legislation was to
get businesses to spend more to stimulate the economy, in reality most
companies got enormous tax breaks for doing what they were going to do
anyway. FedEx and Verizon are big beneficiaries of this subsidy as they
buy aircraft and build cell phone towers.
Bank Bailout, round 2. Americas taxpayers spent more than $2 trillion to
bailout Americas financial institutions during the recent banking crisis.
But the terms of the bailout did not address whether the financial
institutions involved could use the losses incurred during the crisis to
reduce their taxes for years to come, in effect, giving them a second
bailout. Bank of America used its losses as a get-out-of-taxes free card.
Many other banks and financial institutions did the same.
IT DOESN'T HAVE TO BE THIS WAY
There are two bills in Congress that would close some of these loopholes
and ensure that some companies pay their fair share of taxes.
The Cut Unjustified Tax Loopholes Act (S. 268, introduced by Sen. Carl
Levin (D-MI)) would close offshore loopholes by establishing command and
control provisions that would treat foreign subsidiaries controlled from
America as U.S businesses for tax purposes. It would also end some of the
deductions corporations presently enjoy from stock-option based pay of
corporate executives, and close some of the oil and gas subsidies in the
tax code.
The Corporate Tax Dodging Prevention Act (S. 250, introduced by Sen Bernie
Sanders (I-VT) and H.R. 694, introduced by Rep. Jan Schakowsky (D-IL))
would end the current practice of deferral that allows companies to avoid
taxes on offshore profits, both those earned offshore and those shifted
there through accounting gimmicks. This bill would tax the global profits
of U.S. corporations and provide for a 100% foreign tax credit for any
taxes paid to foreign governments. It would raise $590 billion over ten
years according to the Congressional Joint Committee on Taxation.
There is widespread and growing public opinion among the American public
and the small business community that corporate tax loopholes need to be
closed so we have the money to invest in a more promising future. This
support is seen across the political spectrum. Corporate tax dodging is
not a Republican issue or a Democratic issue, it is an American issue. The
American people are saying it is long past time that corporations step up
and pay their fair share to fix the debt and assure that our country has
sufficient public investment to create opportunities for all to succeed in
their life, their liberty and the pursuit of happiness for them and their
families.
Authors: Scott Klinger, Sarah Anderson, Javier Rojo, Institute for Policy
Studies
Editorial Support: Frank Clemente, Americans for Tax Fairness
Designer: Tyler Driscoll
Methodology
For a description of the methodologies used to determine corporate taxes
paid, corporate tax subsidies and CEO compensation go here:
<http://www.americansfortaxfairness.org/baseball-methodolgy/>http://www.americansfortaxfairness.org/baseball-methodolgy/
The Institute for Policy Studies (IPS) is a community of public scholars
and organizers linking peace, justice, and the environment in the United
States and globally. We work with social movements to promote true
democracy and challenge concentrated wealth, corporate influence, and
military power. Visit online at: <http://www.ips-dc.org/>www.ips-dc.org/
Americans for Tax Fairness (ATF) is a diverse campaign of 280 national,
state, and local organizations united in support of a tax system that
works for all Americans. It has come together based on the belief that the
country needs comprehensive, progressive tax reform that results in
greater revenue to meet our growing needs. Visit online at:
<http://www.americansfortaxfairness.org/>www.americansfortaxfairness.org/
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