Corporate Tax Cheaters, Part II
My last blog concerned the subject of how corporations and the super-rich are constantly finding enough loopholes to avoid paying taxes. As I noted, I was barely scratching the surface for there is a lot more to the subject. Now it is time to dig a little deeper.
In a recent commentary Chris Hedges wrote that:
"A fourth of the country's largest corporations--including General Electric, ExxonMobil and Bank of America--paid no federal income taxes in 2010. But at the same time these corporations operate as if they have a divine right to hundreds of billions in taxpayer subsidies. Bank of America was handed $45 billion--that is billion with a B--in federal bailout funds. Bank of America takes this money--money you and I paid in taxes--and hides it along with its profits in some 115 offshore accounts to avoid paying taxes. One assumes the bank's legions of accountants are busy making sure the corporation will not pay federal taxes again this year. Imagine if you or I tried that."
Hedges quotes Kevin Zeese, the director of Prosperity Agenda, as follows: "If Bank of America paid their fair share of taxes, planned cuts of $1.7 billion in early childhood education, including Head Start & Title 1, would not be needed," Zeese pointed out. "Bank of America avoids paying taxes by using subsidiaries in offshore tax havens. To eliminate their taxes, they reinvest proceeds overseas, instead of bringing the dollars home, thereby undermining the U.S. economy and avoiding federal taxes. Big Finance, like Bank of America, contributes to record deficits that are resulting in massive cuts to basic services in federal and state governments."
Here's what is bothering me the most -- and something that should cause citizens to rise up together in anger -- is that virtually every state is suffering huge budget deficits and politicians are constantly claiming that we have no money and therefore need to "cut spending," which has become the constant mantra of the Republican part. The report in the Huffington Post noted above provided a chart put together by the Public Interest Research Group showing an estimate of each state's share of the $100 billion tax burden shifted to the states. In other words, this is money corporations should have provided but did not and instead state taxpayers have to pay. For my state of Nevada it comes to about $652 million; for Wisconsin the amount is $1.6 billion; California ranks number 1 at about $11.7 billion.
What is this all about? What are these tax havens? When and how did they come about?
Part of the answer is provided in a recent book by Nicholas Shaxson called Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens. It is a book that, in the words of one reviewer, "explains the nuts and bolts of tax havens..." and "lays bare the mechanism that financial capital has been using to stay in charge: capturing government policymaking around the world, shaking off such irritants as democracy and the rule of law, and making sure that suckers like you and me pay for its operators' opulent lifestyles." While I have not completed reading this book the first three chapters plus the prologue have given me an idea of where this is headed. In short, the author presents evidence that corporations and the wealthiest individuals in this country -- and in fact all over the world -- will do anything to avoid paying taxes. In the prologue, Shaxson puts it bluntly, saying that "The users of tax havens might be escaping any number of different laws or regulations: taxes, criminal laws, insider trading rules, inheritance rules, environmental laws, or financial regulation. If there is a law to stop or regulate it, there will probably be places that offer escape routes from that law....The escape routes from the rules and laws of society are provided almost exclusively for the benefit of wealthy and powerful insiders -- leaving the rest of us to pick up the bill."
At the start of chapter 1, the author catches the reader's attention with this statement in the first paragraph: "Over half of world trade passes, at least on paper, through tax havens. Over half of all bank assets, and a third of foreign investment by multinational corporations are routed offshore. Some 85 percent of international banking and bond issuance takes place in the so-called Euromarkets, a stateless offshore zone...Nearly every multinational corporation uses tax havens, and their largest users -- by far -- are on Wall Street."
Altogether, as the author documents, literally trillions of dollars have been funneled away from the U.S. Treasury. This is money that could provide millions of school children with a decent education and could be used to provide college scholarships for thousands of students, create homes for thousands of homeless, create treatment for the addicted and alternatives to incarceration for juvenile offenders. The money could repay our national debt and lift millions out of poverty, while provide millions of jobless with good paying work. But corporate America and the rich who run it do not want that. They are looking out for Number 1. As Leona Helmsley once quipped, "Taxes are for the little people."
In subsequent blogs I will provide updates as I continue reading this book.
Posted in Blog, Political Landscape
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