Corporate tax evaders

Richard Fulton

The Republicans in congress are getting ready to introduce to the country what they call a “tax reform” package that will lower the taxes for all of us—but mostly for the rich and for corporate America.

They are juggling tax brackets and whining about the heavy burden of taxes on American corporations. You won’t hear from them the facts about just how much corporate America actually pays in taxes, however, nor how they avoid paying taxes by a variety schemes that park their billions in offshore accounts. Accounts that pay no income taxes.

The GOP lawmakers point out that the American tax rate for corporations is 35 percent, the highest in the industrial world. They are correct, this is the statutory rate. They don’t mention what the “effective” rate paid is for most corporations.

Because of loopholes in the tax code that cut corporate tax burden, 288 big, profitable corporations paid a tax rate of 19.4 percent from 2008 to 2012 the New York times reports. Twenty three paid no taxes at all (GE, Boeing, Verizon). The tax laws have not changed since then.

In addition to this, corporate America has stashed $2.6 trillion of profits off shore where they pay no income taxes. A group of 95 international news outlets, led by the Guardian newspaper, have done some investigative digging and upended a treasure trove of information about offshore accounts and who uses them.

Their reports, cumulatively called the Paradise Papers, are now coming to the public through the evaluation of 13.4 million files leaked to them out of two offshore enabling services. You will be hearing more and more about the content of these papers in the coming weeks. Watch the news media.

The files come from huge law firms that get paid to find loopholes in nations’ laws and to connect the super rich and corporations to offshore countries eager to get deposit of untold billions in exchange for secrecy, little paper work, and no taxes.

United States corporations have $2.1 trillion dollars of profits parked in offshore accounts: Apple has $238 billion, Pfizer, $178 billion, Microsoft $146 billion, GE $82 billion, you get the idea.

Where are the biggest offshore destinations? Bermuda, Ireland, Netherlands, Luxembourg, are a few of the more favored.

Indeed, the European Union is trying to crack down on the Irish tax haven. Recently their court fined Apple $14.5 billion for tax evasion from their Irish dummy corporation. Apple, of course, is fighting it and in the meantime moving their assets to the Isl. of Jersey, another hospitable tax haven.

You won’t believe this but Apple has found an advising law firm that has gotten them a tax haven that is not housed in any country. No tax threat there, since there is not government there. How can this happen? Don’t ask me, it must be the great bank in the sky.

The GOP argues that if we lower the tax rate for corporations they will use the savings to create jobs. But clearly many of the largest corporations simply park the money in offshore accounts. No jobs there. Just compound interest.

Add this to the propensity for large companies to use their huge profits to simply buy other companies or buy back their own stock and you see how little corporate America cares about creating jobs; or, relatively, for investment in research and development.

But what the heck, let’s give them more tax breaks and let congress find a way to make up for the lack of income this represents by, I don’t know, maybe taxing the not so very rich by taking away tax deductions on housing interest or student loans and/or whatever middle class break they can cut in the omnibus bill.

Richard Fulton is an emeritus professor of political science.