by Damozel | At the Raw Story, Mike Sheehan sums up the effect: "Tax money for tax cheats." And by "tax money" he means dollars collected by the IRS from people like you and me: money which is being used to bail out Wall Street and to line the pockets of government contractors. The Treasury estimates that it loses $100 billion a year as a result of income being shipped offshore (WaPo) The Washington Post (via Memeorandum) reports on the GAO's recent study of companies that have subsidiaries in locations where they can avoid paying US taxes.
Of the 100 largest public companies, 83 do business in tax-haven hotspots like the Cayman Islands, Bermuda and the British Virgin Islands, where they can move their income into tax-free accounts. .In the list of 100 companies that GAO studied were 63 with major federal contracts, including Caterpillar, BearingPoint, Boeing, Merck & Co. and Kraft Foods. ...Legislators gave particular attention to the 14 companies on the list that received bailout money from the Treasury in the recent financial meltdown....
The bailout recipients on the list include Bank of America, which received $45 billion; Citigroup, $45 billion; American Express, $3.4 billion; and Goldman Sachs, $10 billion, according to the Taxpayers for Common Sense watchdog group.
The study didn't address which of the companies doing business in tax-dodger hotspots actually dodged taxes. I'm a cynic, so I'm guessing "all of them."
And let's be fair. Some of the 100 companies don't happen to have such access.
Congressional Dems are vowing to end tax breaks for tax dodgers. They call it what it is: a question of patriotism.
"This is kind of like economic patriotism," Dorgan said. "Americans were told you have to pony up some money to help these companies. And it's rather infuriating for them to find out now that those companies, when they were profitable, didn't want to pay taxes and found clever ways to hide their money overseas."... (WaPo)
To which AIG's company spokesman replied that he can't really say whether doing business in tax haven hotspots reduced his company's tax bill.
You know what's "absurd"? That he can't say one way or the other because it's "extremely complicated." [I]t's always "complicated" whenever big business gets out of paying taxes or moves jobs out of this country so it can pay slave wages elsewhere. Blah blah creating jobs blah blah trickle down economic blah dee blah blah "trickle down." Been there, heard it all, seen the results, and paid the bill for it.
Amen to John Aravaosis:
Especially in this climate, it's time to either make this available to everyone or shut it down for everyone. At a minimum, any company who wants to do business with the US government - and they're all free market phonies and freeloaders so they want do to this - eliminate them from applying for federal business if they're going to avoid paying federal taxes. Do it today. (AMERICAblog)
In fact, Rep. Levin noted that not all companies have set themselves up to have equal access to tax havens.
Levin noted that not all companies use such havens and some use far fewer than others. The report found that Citigroup has set up 427 subsidiaries in tax-haven countries, including 91 in Luxembourg, 90 in the Cayman Islands and 35 in the British Virgin Islands.
Levin said other havens where Citigroup has subsidiaries include Switzerland, Hong Kong, Panama and Mauritius. Morgan Stanley has 273 subsidiaries in tax-haven countries, 158 of them in the Caymans, according to the GAO.
"Pepsi has 70 tax-haven subsidiaries, while Coca Cola has eight," Levin said. "Morgan Stanley has 273, while Fannie Mae has zero, and Caterpillar has 49, while Deere has three.'' (WaPo 2)
Last year, Obama joined Levin in proposing legislation to stop tax dodgers from dodging taxes. And he pledged during his campaign to stop companies from avoiding taxes by shipping income to tax havens. (WaPo2)
"This is a basic issue of fairness and integrity," Obama said in introducing the 2007 bill. "We need to crack down on individuals and businesses that abuse our tax laws so that those who work hard and play by the rules aren't disadvantaged." (WaPo2)
Of course it isn't just the facts that some businesses don't pay their fair share that's a problem.
Some critics of the loophole argue that the secrecy in tax-haven countries may hide shady accounting at some businesses. Members of Congress say that investigators at the Internal Revenue Service are outgunned in trying to track down who is crossing the line and who is not. (WaPo2)
As the article says, this is a "perennial" issue that regularly gets shuffled aside. This time it may actually take root.
Amen to that, brother.
The irascible DownWithTyranny says:
And DWT posts this most excellent music video: "Offshore Banking Business."
Memeorandum has more blogger response.
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Most excellent reporting!! Thanks!!
GAO Report US Corporate Tax Dodgers
The GAO Report is locateed here for easy sharing!!
http://www.scribd.com/doc/10736562/GAO-Report-US-Corporate-Tax-Dodgers
Posted by: Guy Razer LtCol USAF (Ret) | January 17, 2009 at 10:24 AM
Thanks, Guy!
Here's the GAO link to the full report
(http://www.gao.gov/new.items/d09157.pdf) and to the summary
(http://www.gao.gov/docsearch/abstract.php?rptno=GAO-09-157)
Posted by: Deb | January 18, 2009 at 11:45 AM