Wednesday, October 18, 2017

Cheating the system? It is the system

A new report  by U.S. PIRG and the Institute on Taxation and Economic Policy (ITEP) found that 73 percent of companies on the Fortune 500 list are taking advantage of overseas tax havens—costing the United States $752 billion in federal tax revenue last year alone.

The new study discovered that, in total, America's most profitable corporations in 2016 had $2.6 trillion deposited overseas in over 9,000 subsidiaries in various locations, including tax havens like Bermuda and the Cayman Islands. The Trump-GOP tax proposals would, if passed, make this bad situation even worse as Congress considers proposals to institute a near zero percent tax rate on profits booked offshore by multinational corporations. Richard Phillips, a senior policy analyst at ITEP, said "Lawmakers shouldn't be discussing how to sweeten the pot and give corporations a huge tax break that amounts to a huge financial reward for engaging in bad corporate behavior."  

The system is working exactly as policymakers designed it. Why should policymakers pause? In reality, they are accelerating. Al Capone was minor-league compared to these guys.

366 of the 500 companies on Fortune's list"operate one or more subsidiaries in tax haven countries." Furthermore, 30 companies with the most money officially booked offshore for tax purposes collectively operate 2,213 tax haven subsidiaries.
  1. Apple, which "holds at least $246 billion offshore, a sum greater than any other company's offshore cash pile," would owe $76.7 billion in U.S. taxes if this profit was not overseas;
  2. Citigroup, which stashes $47 billion overseas, would owe $13.1 billion in U.S taxes; and
  3. Nike, which holds $12.2 billion offshore, would owe $4.1 billion in U.S. taxes.
These corporations are the real "Benefit Cheats" and “Welfare Queens”. We are at the mercy of mega-corporations. This is just one example.

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