CEO Tax Havens and the Lack of Loyalty to the U.S.
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The Advantages of Tax Havens
When large companies move their income abroad to tax havens, they’re deferring U.S. taxes as long as they keep it outside of our country. When the earned money is brought back to the U.S., taxes are expected to be paid less a credit for income taxes they’ve already paid abroad.
In 2004 Congress passed the American Jobs Creation Act which allowed companies to bring back profits held offshore one time with an adjusted tax rate of 5.25 percent instead of 35 percent. About $312 billion was brought back that qualified for the tax break, however, very little jobs were created and it seems most of the money was used to buy back stock. Corporations are now lobbying again for a repeat of the that tax break with their politician’s again saying this is needed to create jobs.
A long as companies are able to shift profits around from country to country nothing is going to change. There is no fairness and the tax burden is on the small business and people, the 99%, who don’t have a need for sophisticated tax advisers since their barely able to make ends meet.
Citigroup, Morgan Stanley, and Bank of America had over 800 tax havens in 2008. These financial institutes were included in the $700 billion bailout which Congress approved. Others enjoying tax havens are Apple, Google, Microsoft, Procter and Gamble, Wells Fargo & Co., General Motors Corp., GMAC LLC, PepsiCo Inc., Coca-Cola Co., Caterpillar Inc. and Deere & Co.
When large US companies go international but are still primarily based in the United States they are using our roads, airports, courts, telecommunications, and public services that are paid for by our tax dollars. When they pay little or no taxes, due to tax havens, it’s a direct slap to our faces that is being allowed by our government who allowed and continue to allow this to happen.
It Hurts Small Business
Any small business, whether it’s a bank, retailer or insurance company, is competing against large corporations such as Bank of America, Citigroup, GE, or AT&T, who can take advantage by opening a subsidiary in an offshore tax haven such as Bermuda or certain countries in Europe that offer lower taxes. It’s, unfortunately, a legally way to dodge paying corporate taxes. By evading taxes that should be paid, the burden is left to and put upon the small businesses who wind up paying up to 35% on their earnings. The corporations meanwhile, enjoying their tax haven status pay 2.3% rate on foreign income.
Retail giants such as Best Buy and Target maintain subsidiaries in Bermuda but they don’t operate any retail or distributions centers so it appears their subsidiaries exist only to reduce taxes or financial gains.
Tax havens mean higher earnings for CEO’s, allowing more money to be spent on lobbying to help keep the tax havens safe. Over 68 coporations didn’t pay taxes over the last three years, with Wells Fargo leading the pack...and Republicans gripe about the 47% of American taxpayers who didn’t pay...due to not having enough income.
When is the last time Wells Fargo, Bank of America, Citigroup or any other financial institution actually offered help to it’s customers or small businesses with reasonable loans? After receiving bailout money plus the $7 million secret loans, their way of thanking the U.S. taxpayer was to restructure bank fees, increasing of course. They don’t care about the ‘average’ person, they are appealing to the wealthy. They don’t make money on the ‘average’ person and it’s all about money.
When large companies spend more money on lobbying than they do on paying taxes it should be very apparent their interests is only geared toward swindling the government and helping themselves, their families and wealthy friends. Despite using the many tax write-offs, loop holes, and tax havens, they continue to do everything in their power to abuse the system. The word “Patriotic” is not in their vocabulary.
Institute for Policy Studies on Executive Excess 2011:
“Of the 25 companies that paid their CEO more than Uncle Sam, 20 also spent more on lobbying lawmakers than they paid in corporate taxes. Eighteen gave more to the political campaigns of their favorite candidates than they paid to the IRS in taxes.”
Well, golly, by the time these guys have paid themselves, given to political campaigns and paid lobbyist and then paid little or no taxes, they must be totally exhausted but eager to celebrate...they’ve made good money, earned more on stock holdings, etc. and they’ve written off their lobbying costs. They’ve also written off political campaign donations* because it’s allowed if donated to a non-profit political group who can contribute legally and it’s on it’s way to their members in Congress for their political campaigns... Corporations spend big bucks on their tax people...a vacation and celebration for all in Bermuda may be in order.
*Political donations are not deductible, but donations to non-profit political groups can be deducted. Supposedly 50% of a 501(c)(4’s) political group’s activities can’t be political. It’s apparent some are but The Internal Revenue Service, which has jurisdiction over non-profits, and the Federal Election Commission which regulates financing or races seem to be hiding their heads in the sand and donations are flooding in...Crossroads Grassroots Policy Strategies led by Karl Rove would be a good example. We owe this new mess to the Supreme Court who lifted restrictions on corporate spending on elections and are now allowed to keep donor information secret and in doing so provided yet another tax haven.
Be patriotic and defend your country! Let your congress people know how you feel. Support them writing a letter. Click of the highlighted links below for more information.
Sen. Levin Introduces Stop Tax Haven Abuse Act « Task Force on Financial Integrity and Economic Development
S.1346
Latest Title: Stop Tax Haven Abuse Act
Sponsor: Sen Levin, Carl [MI] (introduced 7/12/2011) Cosponsors (7)
Related Bills: H.R.2669
Latest Major Action: 7/12/2011 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.
H.R.2669
Latest Title: Stop Tax Haven Abuse Act
Sponsor: Rep Doggett, Lloyd [TX-25] (introduced 7/27/2011) Cosponsors (56)
Related Bills: S.1346
Latest Major Action: 8/22/2011 Referred to House subcommittee.
Status: Referred to the Subcommittee on Capital Markets and Government Sponsored Enterprises.
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Links to more information on Tax Havens
AABA Association for Accountancy and Business Affairs
Tax Justice Network
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You really did it here. Simply awesome. I am extremely glad to have you on my team at The Housefire Project my friend. We're finally reaching a point to where you'll see some progress. The solid foundation that is required is taking more work than expected, but we're getting there. Thank you for being a patriot!
jim b
Thank you Old Poolman, your comment is appreciated! It's a sad situation and until various laws are changed it will continue. Bribery in one form or another has been going on since the beginning of man and it's always going to be a struggle trying to maintain fairness due to the personalities of the people and the money involved.
I'm of the opinion that the place to start is looking at the future. Dealing with those things that are already in place and have been for some time is nothing but frustrating. If we keep a close eye on bills being written for the future, and get enough people to protest loudly on those that work against the people, we could start to change things. Jim is working on an organization called the Housefire Project that just might be able to get this rolling. One or two people calling their elected representatives and protesting a certain proposed bill means nothing, millions of people calling gets their attention. This can be done, but people need to wake up and start doing something besides just complaining to their friends.
I like the way you think.
Auntie D, I am proud to see so many of my conservative friends weighing in here and showing them that we are not socialistic bomb throwers, but want real parity and justice within our economic system. How long have we heard the endless cry from Corporate america that their tax rate is threatening job creation? Whose buying it? There is a clear distinction between sturggling small business and these corporation that want to keep their advantages over all the rest of us at all costs. I will have to drop by, for tea and crumpets some time.
I tell conservatives that we are not trying to destroy free-enterprise, but trying to preserve it against those who would take advantage. I am more than willing to do anything to help to curb the abuse.
I have written a couple of articles a few months ago that touch on your theme.
http://credence2.hubpages.com/hub/Why-Do-Conservat
http://credence2.hubpages.com/hub/Why-Obama-is-Rig
Thanks, Cred2
Crede,
I for one do not think that folks who disagree with me are anti American or socialists. I'm smarter than that. I used to be further left than you could possibly travel in two life times. I don't make a very good conservative either obviously. I don't like greed, but I love Capitalism. Without reasonable guardianship this thing of beauty can also be fertile ground for greed. I truley get that. We have a difference of opinion in what "reasonable" guardianship is. However we go about controlling greed it can't impede a company's ability to be competitive. Bottom line is that they will find a way to be competitive because they depend on, and have stock holders that hold them accountable for a profit. I struggle here to be candid. The old hippie in me gets red in the face when I see the ridiculous bonuses that these fat bastards are sticking in their pockets. There is a war going on inside me, but math always wins out. I may not like it, but as a small business man I understand this jungle we live in. I dream in gray, but live in black and white. It keeps me out of the red. I hope that we can come together and still balance the books.
I don't get into these discussions very often any more. Usually it leads to insults and I don't waste my time with that these days. There's just two much work to do, but I DID want you to understand that I think you love this country as much as I do. I'm sure of it. I'm sorry that some of our brothers and sisters on the left and right don't show more class, but perhaps we can show them how it's supposed to work.
jim
Jim, We are not so far apart. Greed is a necessary component of capitalism, otherwise the incentive to excel and move it all forward is not there. It is just when things get out of hand, like in the case of this article from Auntie. We want to focus our tax breaks and relief on small business people like yourself, who are the true engine of the economy and who thanks to the whining corporations put you an structural disadvantage in the competitive marketplace.
I love the country enough to know that it can only survive when opposing forces and interests are kept in balance.
There are forces that stand to gain by having us all fight over things. We can disagree as to what extent that the Government involves itself in the business community. But we both can agree that the corporations claim to excess government regulations and taxes are dishonest and convenietly leaves out its desires for profitability at the expense of the rest of us.
Asking that all the players play by the rules is, I hopefully believe, "black and white". It does not have to conflict with the arithmetic.
As always it is nice to see you again...Cred2
You too Crede. You're a gentleman. There's still that problem of providing a playing field that allows them to be competitive with companies that pay no taxes and or have much cheaper labor. If my stock is losing money, I'll move my money to a place where I it isn't. I'm not trying to win a debate. That doesn't do anything to solve problems. I'm just trying to give you a trip inside my head with this stuff. See, this tax on the rich sounds very fair on the outside. Millionaires and billionaires paying a little more sounds very reasonable even to me, but this is more than that. It dips into the small businessman's pocket too. Combine that with the banks buying tight, and the cost of Obama Care glaring us in the eye, we are forced to put a pause in place on hiring and expansion. We have no choice. In fact, I'm no longer in business. (FREE!) It's not just because of this, but it was the straw that broke the camel's back. I'm not going to fight the competition and have my government dragging me backwards too. Mike (Old Pooman) is talking to buyers too! I've been in the game for over thirty years. Let someone else do it. I still have a roaring fire in my belly and I'm using it to build the Houserfire Project.
Like I said bro., I'm just giving you a peak inside the brain with no pants. It's what's going on inside the other conservative brains too. Most of them work for someone else and don't really know what it's like here in the jungle. Most aren't in the direct line of fire, but will still get hit indirectly. It's hard for me to understand their extreme passion, but they make it hard for guys like me to be able to reach out to my brothers and sisters on the left, because their dumb asses are walking around and calling you guys freaking Socialists. Hate it.
jim
Cred2 and Jim, it's nice to see comments without personality bashing. Small businesses can't complete with the write-offs big business has. The playing field needs to be fair but big business doesn't think of small businesses and they're not paid to...a whole different mind set. The only way it's going to change is to work from the bottom up with more people supporting tax changes that will help all taxpayers including small business.
Gentleman Jim,
This is interesting, but I don't know that we can solve this with the tax code, if the problem is as you define it. This rises to the level of international commerce. We simply cannot compete with rickshaw labors costs in China and its, still, command economy. Their government subsidizes so much for their industries that they have a competitive advantage. Our system is not designed to deal with that even if our corps paid nothing at all in taxes. There are structural disadvantages for American business, even in Europe the Government gives them more assistance in facing international competition that we do here, Maybe the case for fairness needs to be made with our trading partners who take advantage.
How does the fact that a small surcharge for the wealthy of the wealthiest affect you as a small business for intstance? I cant see the benifit of giving the big boys all the breaks they want, at what point will they be sastified? I still blame lack of hiring and expansion on lack of demand, getting money into the hands of consumers is the fastest way. I am not convinced that job programs cannot work to provide at least temporary stimulus. You're the business man and I defer to your experience. But when I read articles from people like you they say that the lack of demand is what holding expansion back, not so much concern about taxes today or in the future, I cannot help but to pay attention.
Thanks, Jim and Auntie..
Auntie,
Crede and I aren't hung up with the normal garbage that keeps the conservatives and less conservatives apart. We don't have to think alike to have genuine respect for one another. That's cool that you noticed!
Crede,
You know I don't like the way conservatives bend things to fit their agenda's anymore than I like it when liberals do. But here's the thing. The President says, " I just feel that it's fair for those who are fourunate enough to have more, the millionares and billionares, to give a little more." It rolls off his toungue so beautifully, it even has ME nodding my head with approval. But digging a little deeper, this effects anyone making over 250K a year, and that stifles a lot of small busines growth. Some people don't see how that works, and I'd be happy to respectfully explain it for anyone who doesn't, but for now, I'll move along.
The demand IS a super biggy. High unemployement, and lower bottom line cuts back demand, and the snow ball effect kicks in. In business, if materials go up, the consumer pays for it. As business costs go up, that cost is passed to the consumer, and the more expensive the goods or services are the less the demand. If the costs come out of the other end, our pocket books, the incentive to deal with the unbelievable pressure and responsibilities that go with being in the position vanishes. The small business owner making two hundred fifty thousand can easily leave the business and go to a big company making thirty to forty less and let the that guy deal with the BS. Sucks, but it's true.
The other thing that irks us is that most of us have worked extremely hard and taken enormous chances. I lost two business before getting it right the third time. Lost every dime I had and started over twice. When you look at the quote from our President above, what this sounds like to us is that we just got lucky and had a money tree pop up into our back yard while others wern't so fortunate. If that were the case, it would be somewhat different. Saying "just making those more fortunate, pay a little more makes us look selfish for not going for it, and rallies his base, but it just simply isn't true. I'll help anyone who can't help themselves. Old Poolman is the most generous person I've ever known. I know this is hard for folks from outside the old jungle to buy, and I really DO understand this.
This is small business I'm talking about. The corporate thing is another matter. Lotta greedy stock holders,and greedy CEOs there, and it gets complicated.
Anyway, just want to be able to take a friend behind enemy lines and give em a peek.
jim
Cred and Jim, changes need to be made beyond taxes, imports and trade agreements. It's really complex isn't it? I've been a small teeny business owner and did okay but certainly didn't have funds to invest or the income for great write offs and my tax rate was a heck of a lot higher than big business. I should have 'off shored' my massive income :-).
![Can You Eliminate the Deficit with Spending Cuts Alone? Give It A Try - THE GAME (updated - 4/16/2012) [19]](http://s4.hubimg.com/u/6470619_50.jpg "Can You Eliminate the Deficit with Spending Cuts Alone? Give It A Try - THE GAME (updated - 4/16/2012) [19]")
Old Poolman Level 7 Commenter 5 months ago
This is a truly outstanding hub, and educational for me. I think we all know these Corporations pay someone for these deals that save them huge amounts of money. What they call Campaign Contributions could also be called Bribes. There are many websites available that show the amounts of these contributions and who they went to. Just follow the money and it explains a great deal about the decision making processes of our elected leaders.
This was an outstanding piece of writing.