Corporations holding 183 billion dollars in tax shelters overseas

[akh]

So, if you needed any more proof that the average US citizen is being run over by corporate greed, I got something for you. I read this and flames shot out of my ears, acid dripped from my mouth, and laser beams shot from my eyes.

 

http://mobile.bloomberg.com/news/2013-03-08/offshore-cash-hoard-expands-by-183-billion-at-companies.html

 

It estimated that if this money was held in the US, and properly taxed, it would cover the sequester for an entire year. GE is the worst offender at 83 billion. They payed 1.8% taxes over a ten year period. Who is picking up the slack? Thats right the average American.

 

This isnt anything new, but more and more corporations are doing the same. As far as I can tell, shareholders dont even get a return, its straight profit for the corporations. I think this news coupled with the attorny general making statements like this, http://touch.latimes.com/#section/-1/article/p2p-74709450/, is ever increasing evidence as to why the average american is falling behind, getting lost, and slumping into poverty. HSBC was caught laundering money for Al Qaeda and Mexican drug cartels, but not one person was prosecuted!

 

All the while our public school systems are failing, especially in the sciences and math, and lack funding. Tuition cost are rising, student debt is climing, and tech corporations complain they cant find skilled worksers for open jobs. So lobbyist are pushing for more H-1B visa to fill the ranks with lower wage foreign workers

http://mobile.nytimes.com/2013/02/13/business/tech-companies-and-immigrant-advocates-join-forces.xml But somehow we lack the tax dollars to help correct the education problems and to train skilled workers.

 

Its unpatriotic, its criminal, its immoral.

 

We are so far from a Democratic Republic. Welcome to Fascist/Corporatist America! Its just getting worse and worse

 

How do we fix this?

Edited March 13, 2013 by akh

[menageriemanor]

I can't read the last link, is it? The NY Time join forces xml

 

I have to say, from an outsiders viewpoint, I CANNOT comprehend the aggressive championing of the poor and battling middle classes' rightwing voters to vote to ENABLE and encourage the INSANELY WEALTHY to completely rip them off, by voting in people who have no real interest but to get their multimillionaire/billionaire buddies domination of the pig trough. Even as, to my horror, the rightwing and wealthy in Oz are desperate to follow, and great swathes of nobodies are again, aggressively fighting to let them. It's as tho 1/2 the world has decided to hold themselves up, take their own money, and then give it to Cheney, et al, and deny their children inheritance, tertiary education and healthcare.

 

I understand those MAKING the money grabbing without guilt, without a moment's compunction, twisting laws, escaping paying a FAIR tax, but it's like watching average people fight for the right to self harm. All voting to encourage MORE self damage to their country and their own family and themselves. I am, in the depressing reality of what is happening, truly surprised and a little encouraged to read a few republicans are actually realising what is happening.

[waitforufo]

So, if you needed any more proof that the average US citizen is being run over by corporate greed, I got something for you. I read this and flames shot out of my ears, acid dripped from my mouth, and laser beams shot from my eyes.

 

http://mobile.bloomberg.com/news/2013-03-08/offshore-cash-hoard-expands-by-183-billion-at-companies.html

 

It estimated that if this money was held in the US, and properly taxed, it would cover the sequester for an entire year. GE is the worst offender at 83 billion. They payed 1.8% taxes over a ten year period. Who is picking up the slack? Thats right the average American.

 

This isnt anything new, but more and more corporations are doing the same. As far as I can tell, shareholders dont even get a return, its straight profit for the corporations. I think this news coupled with the attorny general making statements like this, http://touch.latimes.com/#section/-1/article/p2p-74709450/, is ever increasing evidence as to why the average american is falling behind, getting lost, and slumping into poverty. HSBC was caught laundering money for Al Qaeda and Mexican drug cartels, but not one person was prosecuted!

 

All the while our public school systems are failing, especially in the sciences and math, and lack funding. Tuition cost are rising, student debt is climing, and tech corporations complain they cant find skilled worksers for open jobs. So lobbyist are pushing for more H-1B visa to fill the ranks with lower wage foreign workers

http://mobile.nytimes.com/2013/02/13/business/tech-companies-and-immigrant-advocates-join-forces.xml But somehow we lack the tax dollars to help correct the education problems and to train skilled workers.

 

Its unpatriotic, its criminal, its immoral.

 

We are so far from a Democratic Republic. Welcome to Fascist/Corporatist America! Its just getting worse and worse

 

How do we fix this?

 

Corporations have a fiduciary responsibility to their shareholders. Avoiding taxes is an integral part of meeting this fiduciary responsibility. To do otherwise would be immoral. Yes, they must operate within the law when acting in this fiduciary capacity, but holding earnings made offshore from the US in offshore accounts, from the links you provided, does not appear to be illegal. So it is not criminal. You state that “As far as I can tell, shareholders don’t even get a return, its straight profit for the corporations.” This is nonsense. The shareholders own all the assets of the corporation, both domestic and foreign. Corporate stock prices generally increase when a company holds more cash. The fact that corporate officers are wise enough to avoid needlessly paying taxes also tends to increase stock prices by providing greater faith in the corporate officers. Shareholders can profit from these cash holdings any time they choose. They simply need to sell some of the stock.

 

Perhaps I’m behind the times but last time I checked HSBC is a British bank. The money laundering they did was very bad, but I don’t see how it is related to American corporations holding profits from foreign operations in foreign banks. Based on the actions of HSBC I think American corporations should avoid HSBC but I’m sure there are other banks.

 

With regard to these foreign accounts being unpatriotic, I don’t see how. Americans own these corporations. Stocks from these corporations are in the mutual fund accounts of many Americans. These Americans will rely on their stock holdings and mutual funds for their retirement. Why would rewarding Americans who have saved for their retirement be unpatriotic?

 

With regard to schools, I believe the US out spends most countries per student. So the problem isn’t spending. The problem seems to be more related to how we teach and importance we culturally place on education.

 

I believe H-1B visas have lowered my salary. But then again day laborers must not be too happy with the federal government turning a blind eye to illegal immigration and amnesty for those who come here illegally.

 

 

 

Edited March 13, 2013 by waitforufo

[Bill Angel]

The stockholders themselves may help to correct the problem. For example in the case of Apple there is an effort by certain stockholders to get them to pay out their cash hoard to them in the form of dividends.

Apple's plan for its cash: stock buyback or more dividends likely coming this spring ? Quartz

[overtone]

 

Perhaps I’m behind the times but last time I checked HSBC is a British
bank. The money laundering they did was very bad, but I don’t see how
it is related to American corporations holding profits from foreign
operations in foreign banks.

It is an example of a foreign bank profiting from American tax dodging and profiting from doing business in America with Americans, while acting against the interests of most Americans and America as a whole, as well as breaking the law.

 

And you are wrong about the "other banks" - there aren't really that many, that big. There are so few that when one of them behaves lilke HSBC, the US government will avoid prosecuting its officers, penalizing it heavily, or even revoking its license in America for fear of the consequences to the entire American economy should the prosecution prove successful and the bank injured.

 

 

Based on the actions of HSBC I think American corporations should avoid HSBC but I’m sure there are other banks.

No you don't. You argued quite clearly that American corporations have a fiduciary responsibility to their shareholders to do business with such banks, if the returns on such investments are even slightly higher than other banks offer, as was (and is) true of HSBC. You specifically denied the relevance of bad motives and unethical behavior in such decisions, and declared that to deprive stockholders etc of profit by refusing to invest in such operations would be "immoral".

[Phi for All]

For anything meaningful to come of this discussion, I think the participants need to acknowledge certain common ground, otherwise it's just a wheel-spinning rant-fest with a fence dividing two opposing sides. And we all realize it's much more complicated than business good/business bad.

 

For starters, there's really nothing wrong (basically) with the (free?) market concept. Commerce is necessary, and the capitalist market works better than most systems. The problems start cropping up when business starts asking for exceptions to the rules, exceptions that give one sector or corporation an edge over the rest. It's what every modern business model strives for, but it's at the heart of most of what's wrong with the system.

 

Also, I'd like to hear why we still subsidize well-established industries like oil and sugar. Shouldn't this be common ground for practically everyone, from those who hate the bailouts to those who hate special interest groups to those who love free market principles?

 

What's wrong about the OP is that these corporations are withholding revenue from the system while still using infrastructure paid for and sustained by that revenue. In fact, companies like GE use more of the infrastructure like roads, railways and airports than any other type of user. They get other protections and benefits by being US corporations without paying the full price for those benefits.

 

I always like to remember that when I was born, US businesses accounted for 27% of tax revenue, and the country was strong and steady. Today, those businesses only account for less than 9% of tax revenue, and we're slashing good services and programs while corporations don't want to employ our citizens and don't want to pay their share for things they use the most of.

[akh]

 

What's wrong about the OP is that these corporations are withholding revenue from the system while still using infrastructure paid for and sustained by that revenue. In fact, companies like GE use more of the infrastructure like roads, railways and airports than any other type of user. They get other protections and benefits by being US corporations without paying the full price for those benefits.

Its actually worse than that in my opinion. GE in particular has no intentions of bring this money back to the US. They have permanently reinvested the money over seas. They wont bring it home to be taxed and reinvested here, ever. I agree with you, they use the infrastructure, the stable environment, and a safe place for operations in the US all while paying virtually nothing in taxes and making record profits. It has been mentioned in this thread that a corporations primary responsibility is to their share holders. While I dont hold GE stock, they have very much benefited from the infrastructure and environment that the US offers, which is funded by tax dollars that you, me, and everybody else pays. So where is my return on the investment I am forced to make? Thats right , its overseas benefitting GE and foreign assests. I will never see a return on my investment, and ALL United States citizens, are left to shoulder the ever increasing percentage of the tax burden. But if you are making millions on investments yourself, you most likely dont care, in fact you are cheering.

 

 

 

 

Perhaps Im behind the times but last time I checked HSBC is a British bank. The money laundering they did was very bad, but I dont see how it is related to American corporations holding profits from foreign operations in foreign banks. Based on the actions of HSBC I think American corporations should avoid HSBC but Im sure there are other banks.

HSBC performed U-turn transactions through US financial institutions. They were caught, as were others. They payed a fine, that is it. If you or I did similar, we would be in jail for a long, long time. HSBC is not beyond the reach of the law, they agreed to the fine. But actual prosecution, proper prosecution, was not even a consideration because it was feared that criminal charges would ripple through the financial institutions and cause too much harm to the economy. We handed them a get out of jail free card instead of doing what is right. Why? Because they are a big, powerful, corporation.

 

Edited March 14, 2013 by akh

[waitforufo]

 

It is an example of a foreign bank profiting from American tax dodging and profiting from doing business in America with Americans, while acting against the interests of most Americans and America as a whole, as well as breaking the law.

 

And you are wrong about the "other banks" - there aren't really that many, that big. There are so few that when one of them behaves lilke HSBC, the US government will avoid prosecuting its officers, penalizing it heavily, or even revoking its license in America for fear of the consequences to the entire American economy should the prosecution prove successful and the bank injured.

 

 

No you don't. You argued quite clearly that American corporations have a fiduciary responsibility to their shareholders to do business with such banks, if the returns on such investments are even slightly higher than other banks offer, as was (and is) true of HSBC. You specifically denied the relevance of bad motives and unethical behavior in such decisions, and declared that to deprive stockholders etc of profit by refusing to invest in such operations would be "immoral".

There are lots of banks. To suggest otherwise is rather silly. Banks are competitive so I'm sure there are other banks that provide competitive return. There is nothing immoral about profit. There would be no business without profit. As I mentioned, corporations are morally bound to make profit for their investors. Without profit, why would anyone invest?

 

 

Its actually worse than that in my opinion. GE in particular has no intentions of bring this money back to the US. They have permanently reinvested the money over seas. They wont bring it home to be taxed and reinvested here, ever. I agree with you, they use the infrastructure, the stable environment, and a safe place for operations in the US all while paying virtually nothing in taxes and making record profits. It has been mentioned in this thread that a corporations primary responsibility is to their share holders. While I dont hold GE stock, they have very much benefited from the infrastructure and environment that the US offers, which is funded by tax dollars that you, me, and everybody else pays. So where is my return on the investment I am forced to make? Thats right , its overseas benefitting GE and foreign assests. I will never see a return on my investment, and ALL United States citizens, are left to shoulder the ever increasing percentage of the tax burden. But if you are making millions on investments yourself, you most likely dont care, in fact you are cheering.

 

HSBC performed U-turn transactions through US financial institutions. They were caught, as were others. They payed a fine, that is it. If you or I did similar, we would be in jail for a long, long time. HSBC is not beyond the reach of the law, they agreed to the fine. But actual prosecution, proper prosecution, was not even a consideration because it was feared that criminal charges would ripple through the financial institutions and cause too much harm to the economy. We handed them a get out of jail free card instead of doing what is right. Why? Because they are a big, powerful, corporation.

 

 

GE is a multinational conglomerate corporation. People who invest in GE appreciate this. Most who invest in GE treat it like a blended national/international mutual fund. The advantage GE has over such funds is that stocks have lower fees than mutual funds. You act as if you are being robbed of your national infrastructure dividend, but can you site some source that shows that these offshore funds had anything to do with GE operations within the US? How do you know that these offshore funds were not made in foreign countries by foreign entities owned by GE to be reinvested into those foreign countries to give them their infrastructure dividend?

 

I find it interesting that anyone believes that increased corporate taxes will only result in reduced corporate profits. Taxes are a business expense. Business expenses are charged to customers. So increasing corporate taxes will simply increase prices to consumers. As these prices increase there will be less demand for the products or services taxed. Corporations will then reduce production and their workforces in response to lower demand in order to keep the profit ratio per good or service sold the same. With the money they save in reduced operations they will invest in other operations which meet their profit goals. The location of those other operations will in part be based on the tax structure of the location involved. So if you want more companies offshoring there operations, tax corporations more.

 

Finally, don't you think you are overplaying this whole infrastructure dividend idea? Do you not personally receive great benefit from our infrastructure? If you want to receive more, why don't you take greater personal advantage of the infrastructure? The infrastructure is available to us all.

Edited March 14, 2013 by waitforufo

[Phi for All]

I find it interesting that anyone believes that increased corporate taxes will only result in reduced corporate profits. Taxes are a business expense. Business expenses are charged to customers. So increasing corporate taxes will simply increase prices to consumers.

 

This is only partially true, but it's wielded like a big scary club by big business. In actuality, the market won't always allow prices to rise to cover costs like increased taxes. In fact, it can invite competition to come in at prices consumers prefer. It's actually more true to free market principles than what we have now, which is extreme salaries at the top due to lowered taxes that don't really represent a stronger corporation.

 

Right now it's all about the number crunching, but I don't think many corporations would object to doubling or tripling their tax burdens if they knew it would bring back a robust economy.

 

Finally, don't you think you are overplaying this whole infrastructure dividend idea? Do you not personally receive great benefit from our infrastructure? If you want to receive more, why don't you take greater personal advantage of the infrastructure? The infrastructure is available to us all.

 

Heavens, no. I don't use the roads or airports nearly as much as businesses do. Take any random segment of citizens (to the number equaling that of any corporation) and their personal use of the infrastructure doesn't come close to rivaling what the corporation uses. Furthermore, the kinds of vehicles corporations use on the roadways are much heavier and cause considerably more wear and tear than the average individual vehicle.

 

And even if the amount of use evened out between corporations and private citizens, we're still just asking that they pay their fair share instead of lobbying for special privileges. Sure, they supply the jobs and the goods, but we're the consumers of those goods. We're all needed to make the economy run and that includes tax revenues too.

[overtone]

 

There are lots of banks. To suggest otherwise is rather silly. Banks are competitive so I'm sure there are other banks that provide competitive return

There aren't very many banks as big or as influential or as profitable for their major investors as HSBC. There are so few that the destruction of any one of them - such as HSBC, by jailing its executives and revoking its license - endangers the entire US economy. And of course you insisted that any relinquishment of profit by corporate investors would be an immoral betrayal of the shareholders etc - still do:

There is nothing immoral about profit. There would be no business without profit. As I mentioned, corporations are morally bound to make profit for their investors.

 

So as I pointed out, you spoke too quickly there - you do not think big corporate investors should shun HSBC merely because it helps finance terrorism and crime against their fellow citizens, betrays their country, violates its license agreements, cheats its smalltime customers, and repeatedly breaks the law. That is not unusual behavior for large banks and invstment firms, after all (USB, Wells Fargo, Lehman Bros, Goldman Sachs, etc etc), and shunning such entities would mean refusing higher yields and thereby reducing shareholder profits - you have declared that to be immoral.

 

I find it interesting that anyone believes that increased corporate taxes will only result in reduced corporate profits.

No one believes that.

[waitforufo]

This is only partially true, but it's wielded like a big scary club by big business. In actuality, the market won't always allow prices to rise to cover costs like increased taxes. In fact, it can invite competition to come in at prices consumers prefer. It's actually more true to free market principles than what we have now, which is extreme salaries at the top due to lowered taxes that don't really represent a stronger corporation.

 

Right now it's all about the number crunching, but I don't think many corporations would object to doubling or tripling their tax burdens if they knew it would bring back a robust economy.

 

 

Heavens, no. I don't use the roads or airports nearly as much as businesses do. Take any random segment of citizens (to the number equaling that of any corporation) and their personal use of the infrastructure doesn't come close to rivaling what the corporation uses. Furthermore, the kinds of vehicles corporations use on the roadways are much heavier and cause considerably more wear and tear than the average individual vehicle.

 

And even if the amount of use evened out between corporations and private citizens, we're still just asking that they pay their fair share instead of lobbying for special privileges. Sure, they supply the jobs and the goods, but we're the consumers of those goods. We're all needed to make the economy run and that includes tax revenues too.

 

Well, I hate to break this to you but businesses pay commercial vehicle registration taxes which are much higher than the vehicle taxes you and I pay. They also pay fuel taxes. They also pay taxes when they use airports. All of these taxes pay for infrastructure.

 

All of those taxes paid by business are then passed on to the consumers of the products and services provided by those businesses. They should be. The consumers are the beneficiaries of the infrastructure use.

 

The people pay all the taxes. They always have and always will. Yes the government comes up with creative ways to fool some into believing that others are paying but its not true.

 

Why do you find this to be complex?

 

[Phi for All]

Well, I hate to break this to you but businesses pay commercial vehicle registration taxes which are much higher than the vehicle taxes you and I pay. They also pay fuel taxes. They also pay taxes when they use airports. All of these taxes pay for infrastructure.

 

All of those taxes paid by business are then passed on to the consumers of the products and services provided by those businesses. They should be. The consumers are the beneficiaries of the infrastructure use.

 

The people pay all the taxes. They always have and always will. Yes the government comes up with creative ways to fool some into believing that others are paying but its not true.

 

Why do you find this to be complex?

 

 

With that blanket, you can also say the people pay for all the manufacturing equipment, the buildings and the rest of the real assets businesses own.

 

And personal attack aside, the complexity comes from the spin business has mastered. This spin makes them seem patriotic and wholesome while they withhold a fair share of taxes that help maintain the country whose protections and bounty they enjoy.

[akh]

 

GE is a multinational conglomerate corporation. People who invest in GE appreciate this. Most who invest in GE treat it like a blended national/international mutual fund. The advantage GE has over such funds is that stocks have lower fees than mutual funds. You act as if you are being robbed of your national infrastructure dividend, but can you site some source that shows that these offshore funds had anything to do with GE operations within the US? How do you know that these offshore funds were not made in foreign countries by foreign entities owned by GE to be reinvested into those foreign countries to give them their infrastructure dividend?

 

Did you read the Bloomberg report, at all? The entire article was about shifting, as in moving, profits overseas. As in they didnt make the profit were the money is now residing! The article specifically mentions how the taxes are deferred until profits are brought home (as in the U.S.A.), and how these profits have been permanently reinvested in foreign assest so they never come back.

 

Basically you are arguing that what is good for GE is good for America. What is good for GE is good for the shareholders which is good for America. But the ideology is flawed. Through wilfulness or ignorance or both, you have left out many details in your assessment.

 

What details? According to 2010 numbers, financial (non-home) wealth was distributed 42.1% for the top 1 percent, 53.5% for the next 19 percent, and a measly 4.7% for the bottom 80 percent.

 

If you look at stock ownership, the top 1 percent owned 35.0 % of stocks, the next 19 owned 56.6%, and the remaining 80 percent (bottom) of Americans hold only 8.4% of the stocks.

 

In both of the above examples, the trend is toward higher concentrations of wealth and stocks into the top 20 percent and even the top 1%. I guarantee this trend has continued through 2011 and 2012.

 

So how is GE's 1.8 tax rate benefiting the country? How is it benefiting 80 percent or more of the population who only hold 8.4% of the stocks? What did 80 percent or more of Americans get for picking up the slack left by GE's 1.8% tax rate? We got a slap in the face. GE sent the profits overseas, to avoid paying taxes, to avoid bringing the profits back to this country. They permanently reinvested in foreign assets, insuring that the money will never come back to US soil. Sure, it benefited the shareholder, afterall it's GE's obligation to do so. But what did it do for the rest of us? You know, the ones who shoulder the extra tax burden! This is the problem!

Edited March 15, 2013 by akh

[waitforufo]

Phi for All,
The intention of my question “Why do you find this to be complex?” was not intended as a personal attack. I apologize for my clumsy question. My intention was simply to understand further you line of thinking.

Yes, the people pay for all the manufacturing equipment, the buildings and the rest of the real assets businesses own. They pay for this willingly because they desire the products or services that the business provides. If this were not true the business would fail. The business owns these assets because they took the risk and provided the initial capital creating the ability to provide the desired goods or services. Those that take the risks reap the rewards. That is the way it has always been and always will be.

You believe the business have mastered media spin and that “This spin makes them seem patriotic and wholesome while they withhold a fair share of taxes that help maintain the country whose protections and bounty they enjoy.” Again you fall into the trap that businesses withhold a fair share of taxes. They do no such thing. Yes they avoid taxes in meeting their fiduciary to their shareholders. They also avoid taxes to keep the price of the goods or services they sell low so as to increase their market. All the taxes they do pay however are passed on to their customers. So who pays these taxes? Look no further than akh’s post above. He states that “80 percent of Americans hold only 8.4% of the stocks.” That 80% are the customers of these tax paying businesses. So, those business taxes are paid primarily by this same 80%. Is that your intention? This was the source of my question “Why do you find this to be complex?” I really would like to know how you see this differently than I?

My belief is that ultimately I pay every tax. No matter how the government structures the tax code ultimately I am impacted by every tax enacted. I pay. So do all my fellow citizens. I’m not going to fall victim to this tax code shell game. I know where the pea is. It is always under my shell and the shell of my neighbors. There is no other place for it to be. I’m baffled by the needless complexity of our tax code. Why not just have a value added tax? At least such a tax system would be honest. Not progressive enough for you? Well that can be taken care of by progressive distribution of tax revenues.

Akh,
I reread the Bloomberg article. The article states over and over again the profits made offshore are being held offshore. Nowhere does it say they are transferring profits made domestically to offshore accounts to avoid taxes. The article states that holdiing profits made offshore “is increasing because of incentives in the U.S. tax code for booking profits offshore and leaving them there.” As an example look what the article says about Apple. “A reason for the overseas cash growth can be linked in part to Apple’s performance. Sales in Asia, Europe and Australia rose 43.7 percent to $80.2 billion in fiscal 2012.” Earnings booked offshore and being held offshore.

[Phi for All]

Phi for All,

The intention of my question “Why do you find this to be complex?” was not intended as a personal attack. I apologize for my clumsy question. My intention was simply to understand further you line of thinking.

 

Then we're good.

 

Yes, the people pay for all the manufacturing equipment, the buildings and the rest of the real assets businesses own. They pay for this willingly because they desire the products or services that the business provides. If this were not true the business would fail. The business owns these assets because they took the risk and provided the initial capital creating the ability to provide the desired goods or services. Those that take the risks reap the rewards. That is the way it has always been and always will be.

 

You believe the business have mastered media spin and that “This spin makes them seem patriotic and wholesome while they withhold a fair share of taxes that help maintain the country whose protections and bounty they enjoy.” Again you fall into the trap that businesses withhold a fair share of taxes. They do no such thing. Yes they avoid taxes in meeting their fiduciary to their shareholders. They also avoid taxes to keep the price of the goods or services they sell low so as to increase their market. All the taxes they do pay however are passed on to their customers. So who pays these taxes? Look no further than akh’s post above. He states that “80 percent of Americans hold only 8.4% of the stocks.” That 80% are the customers of these tax paying businesses. So, those business taxes are paid primarily by this same 80%. Is that your intention? This was the source of my question “Why do you find this to be complex?” I really would like to know how you see this differently than I?

 

My belief is that ultimately I pay every tax. No matter how the government structures the tax code ultimately I am impacted by every tax enacted. I pay. So do all my fellow citizens. I’m not going to fall victim to this tax code shell game. I know where the pea is. It is always under my shell and the shell of my neighbors. There is no other place for it to be. I’m baffled by the needless complexity of our tax code. Why not just have a value added tax? At least such a tax system would be honest. Not progressive enough for you? Well that can be taken care of by progressive distribution of tax revenues.

 

When corporations are allowed to shelter their profits from taxation, or lobby for incentives so they pay less, they're essentially bypassing normal free market pressures. If they choose to pass along tax burdens by increasing the price of goods and services, at that point the consumer is able to exercise THEIR market power and decide not to buy from that company. Then that corporation has to choose between several options, including whether to reduce inflated executive salaries, passing along a bit less to shareholders or leaving their prices where they are and keeping their customer base.

 

I also think the tax structure is far too complex, and the fact that everyone thinks so yet it remains that way tells me that someone with clout wants it that way. If everyone wanted it changed, it would get changed.

 

Corporations are only doing what's allowable within the law. They aren't doing anything illegal. It's the laws and regulations that need to change. Corporations have had it all their way for far too long. There is a push/pull cycle that's been disrupted for quite some time (at least back to the Nixon era, if not back to WWII), and it's allowed corporations to ignore responsibilities that should trump those they have to their shareholders, those to the country that gives them their charter and allows them to shelter under democratic auspices.

[waitforufo]

 

I also think the tax structure is far too complex, and the fact that everyone thinks so yet it remains that way tells me that someone with clout wants it that way. If everyone wanted it changed, it would get changed.

 

 

“Someone with clout wants it that way” sounds too much like a conspiracy theory to me. I think the complexity in the tax code is there for a simple reason. Greater tax revenue is desired. So instead of simply raising taxes that would be immediately perceived by the public, clever ways are found to hide taxes. Doing so reduces the ire of the public towards those raising taxes. This begins the shell game. No, it’s not you paying for this new tax we are told, it’s corporations, It’s the rich, its someone else, so don’t worry about this new tax.

 

Don’t buy into the lie. It’s you paying the taxes. All taxes trickle down. In terms of percentage of personal income the poor always more greatly impacted. Tax simplification would only expose this in clear terms. Those that want increased tax revenues will therefore always avoid tax simplification.

[michel123456]

For anything meaningful to come of this discussion, I think the participants need to acknowledge certain common ground, otherwise it's just a wheel-spinning rant-fest with a fence dividing two opposing sides. And we all realize it's much more complicated than business good/business bad.

 

For starters, there's really nothing wrong (basically) with the (free?) market concept. (...)

That is an open question. IMHO there are some virulent bad points about the (free) market as it is conceived and applied today.

 

Corporations are only doing what's allowable within the law. They aren't doing anything illegal.

You are so naive.

 

-----------------

when the tax officer comes to control you, the working basis is that you cheated. The same working basis counts for corporations.

 

-----------------

For example at this time we are speaking the (free) market makes the prices of basic alimentation grow As a result somewhere people will starve to death.

Other examples are connected with the prices of medicine, wich is not free but constrained by corporations that whish to control the (not free) market.

I think there are very few things that are going well in our market as it is today. Most go wrong. Take energy as another example.

 

As for taxes, the problem is called "tax evasion", not "legal transfer of wealth".

Edited March 18, 2013 by michel123456

[Phi for All]

“Someone with clout wants it that way” sounds too much like a conspiracy theory to me. I think the complexity in the tax code is there for a simple reason. Greater tax revenue is desired. So instead of simply raising taxes that would be immediately perceived by the public, clever ways are found to hide taxes. Doing so reduces the ire of the public towards those raising taxes. This begins the shell game. No, it’s not you paying for this new tax we are told, it’s corporations, It’s the rich, its someone else, so don’t worry about this new tax.

 

Don’t buy into the lie. It’s you paying the taxes. All taxes trickle down. In terms of percentage of personal income the poor always more greatly impacted. Tax simplification would only expose this in clear terms. Those that want increased tax revenues will therefore always avoid tax simplification.

 

Again, claiming "all taxes trickle down" is a meaningless phrase in this context. If a tax is imposed on a product/industry, manufacturers can try to recoup those taxes by raising their prices. At that point, the consumer can choose to pay the higher price or look for a competitor who runs their business a little leaner, and has chosen not to pass the new taxes along to their clients. That's a better use of free market principles than trying to shelter profits from taxes, or arranging for no-bid contracts, or lobbying for exemptions and incentives the other guys in your industry don't get.

 

That is an open question. IMHO there are some virulent bad points about the (free) market as it is conceived and applied today.

 

And I think I implied that when I said there's nothing wrong with the concept. In practice, there are many problems and most are caused by artificial tampering with the relevant pressures.

 

You are so naive.

 

Come on. You took that out of context. What corporations are doing in the OP isn't illegal, but it shouldn't be part of what is allowed because those shelters are giving unfair advantage to certain corporations.

 

For example at this time we are speaking the (free) market makes the prices of basic alimentation grow As a result somewhere people will starve to death.

Other examples are connected with the prices of medicine, wich is not free but constrained by corporations that whish to control the (not free) market.

I think there are very few things that are going well in our market as it is today. Most go wrong.

 

Good examples where corporations are using tactics that shouldn't be allowed in a true free market economy.

[swansont]

Heavens, no. I don't use the roads or airports nearly as much as businesses do. Take any random segment of citizens (to the number equaling that of any corporation) and their personal use of the infrastructure doesn't come close to rivaling what the corporation uses. Furthermore, the kinds of vehicles corporations use on the roadways are much heavier and cause considerably more wear and tear than the average individual vehicle.

That's probably true for most citizens as compared to domestic businesses. I recall a recent story where companies were lobbying to increase the weight its trucks could carry on roads and bridges. I don't think the "Safe and Efficient Transportation Act" has passed, because it's been introduced each year for the last ~3 years. A clear example of trying to increase benefit for companies at the expense of the taxpayer.

 

However, how much does manufacturing by a foreign component of a multinational company use US roads and airports? That was the discussion.

 

 

 

 

So how is GE's 1.8 tax rate benefiting the country? How is it benefiting 80 percent or more of the population who only hold 8.4% of the stocks? What did 80 percent or more of Americans get for picking up the slack left by GE's 1.8% tax rate? We got a slap in the face. GE sent the profits overseas, to avoid paying taxes, to avoid bringing the profits back to this country. They permanently reinvested in foreign assets, insuring that the money will never come back to US soil. Sure, it benefited the shareholder, afterall it's GE's obligation to do so. But what did it do for the rest of us? You know, the ones who shoulder the extra tax burden! This is the problem!

First of all, I think that it must be acknowledged that recent tax rates have been affected by banking losses. Any story that points out that GE paid little or no tax recently really should acknowledge that their financial business lost billions, which contributes to lower tax rates. As it does, to a limited extent, for ordinary people. You can write off investment losses and lower your effective tax rate.

 

What GE has done is move manufacturing overseas and sell products from the plants abroad. Profits from that do not come back to the US, and those are jobs being held by people outside the US, and that's a problem. But if widgets made in Scotland were made by McAcme Corp, a Scottish company, nobody would be complaining. That company has no obligation to benefit the US in any way.

[akh]

 

 

 

 

 

Come on. You took that out of context. What corporations are doing in the OP isn't illegal, but it shouldn't be part of what is allowed because those shelters are giving unfair advantage to certain corporations.

 

 

Just to clear this up further, when I said "criminal" in all honesty I was thinking more figuratively, or morally. In the case of HSBC, their actions were very much against the law.

 

I will admit that my OP comes off a bit rantish (it was actually edited and toned down a bit), but I did not want to hide my frustration and anger. The point I am trying to make is that this kind of stuff is happening across the board in this country. I feel that the average citizen is being marginalized at an ever greater level. I dont think many realize what is happening. Most people are too busy just getting by to take notice. Others find solace in the distraction of pop entertainment and (un) reality shows.

 

But, in my opinion, the greatest tragedy is that we, as Americans have turned on each other. It been a great diversionary tactic for those in power, for those in control. They split us along lines of religion, same sex marriage, global warming, gun rights, ethnicity, and the "makers vs takers". While we are busy playing the game, pitting our best against their best, where nothing matters in the substance of it all, where winning is the only thing to care about, we havent stopped long enough to realize somebody has already ran away with the ball. We've been duped. The "makers vs takers" argument was thrown in our faces, with each taking sides on an ideological front. But it should be obvious by now who the real "makers" are and who is doing all the "taking". This should be something to which almost everybody in this country will agree.

 

If this trend is not curbed, I think it will be the end of this country. We live in a top heavy society, and once we are sucked dry, the "takers" will move on to more lucrative ventures, and the average citizen will be left in the rubble.

 

I want to also be clear, however, that in the case of GE, it is more about our broken tax code than anythings else. It just seems there is little motivation to change it, and I think is is due in part to the fact that there is too much money in politics, that many regulators who are supposed to protect the interests of this country and Americans, retire to work as lobbyists or consultants in the very industry in which they are supposed to have oversight. How tough would one be on their future employers who will undoubtedly pay extremely well for future services. Its a revolving door and a conflict of interest at the highest levels.

Edited March 19, 2013 by akh

[overtone]

 

First of all, I think that it must be acknowledged that recent tax rates have been affected by banking losses. Any story that
points out that GE paid little or no tax recently really should acknowledge that their financial business lost billions, which contributes to lower tax rates. As it does, to a limited extent, for ordinary people. You can write off investment losses and lower your effective tax rate.

Tax avoidance by GE is not “recent”. The 2% figure here is an average over ten years - http://ctj.org/taxjusticedigest/archive/2012/02/press_release_general_electric.php#.UUexFkr_rKY
- and the problem with corporations like GE is much older than that.

The ability of large corporations in the US to avoid paying taxes goes back to years before the crash of ’08. Big advances in tax avoidance came under Reagan’s and Bush’s administrations in the 1980s (Reagan’s defunding and disabling of enforcement agencies, something the executive branch could do without Congressional cooperation, was particularly consequential) , were not rolled back but merely paused or even Congressionally abetted under Clinton’s regime, and were redoubled to near absurdity under W’s Congressionally well-supported incompetence.

I can recall from several years ago – after Reaganomics took hold, but before any crash in US banking other than early deregulation benefitee S&Ls – reading an interview in my local newspaper with an upper level executive spokesman from 3M, a large and influential corporation headquartered locally, in which he was asked about corporate taxation’s influence. He said, for attributed quotation, that 3M only paid US corporate income taxes at all to avoid looking bad - they were capable of adjusting their accounting and financials to eliminate their tax burden entirely, as many other corporations like theirs (multinational, Defense business, varied products, etc) had, but felt that the possible resultant bad publicity was worth avoiding.

GE is a major Defense contractor, and thoroughly corrupt as well as corrupting in consequence (during the hog-trough years of early Reaganomics GE abandoned its former reliance on market competition through innovation and productivity and the like, and from a long reign as #1 in the world at bringing new stuff to commercial markets is no longer in the top 20).

http://www.corpwatch.org/section.php?id=16

In their 2002 report, ""Titans of the Enron Economy: The 10 Habits of Highly Defective Corporations," United for a Fair Economy gave a "special Lifetime Achievement Award" to General Electric
"for scoring the highest average rank across all 10 bad habits, the only company to outrank second-place Enron. GE exceeds Enron’s score by an astonishing 45%.

 

And we notice in passing that if GE merely would have to pass along levied taxes to its customers, as some here assert, somebody should inform their management of this - the amount of money they spend lobbying Congress for tax breaks and loopholes is too significant to throw away in stuff that makes no difference, and immorally depriving their shareholders of dividends rightly theirs.

 

Which is only to say that the overseas dodging is not itself new, only its comparative scale among the many tax dodges of the Reagan Era, now hopefully tumbling to its rest in a pile of garbage and broken parts.

 

Which would only mean we would have to start digging ourselves out, but let's hope for it anyway.

 

edit in: this is just to forestall whining about the horrible unfairness of US taxation on US companies:

http://ctj.org/corporatetaxdodgers/

U.S. corporations with significant foreign profits paid tax

rates to foreign countries that were almost a third higher than they paid to
the IRS on their domestic profits.

Edited March 19, 2013 by overtone

[swansont]

Tax avoidance by GE is not “recent”. The 2% figure here is an average over ten years - http://ctj.org/taxjusticedigest/archive/2012/02/press_release_general_electric.php#.UUexFkr_rKY

- and the problem with corporations like GE is much older than that.

 

Then let's see the older numbers. Because almost $5 billion of tax credit from 2008-20011 is going to suppress the tax numbers by a lot. As is a credit in 2002, from another recession.

 

My point is this: Any company is going to do what it can to reduce the tax they pay. People do, too. Do you not deduct allowable items on your income tax? The point here is similar to what came up during the recent election, when Romney didn't disclose all of his tax returns — it wasn't that people expected to find that he was cheating, it was that they would be upset at all the games that he was able to play to lower his tax burden. The same with corporations. By all means, blame them for being complicit with congress for making a tax structure that can be exploited, but it's the blame for actually taking advantage of it that I don't understand.

 

The ability of large corporations in the US to avoid paying taxes goes back to years before the crash of ’08. Big advances in tax avoidance came under Reagan’s and Bush’s administrations in the 1980s (Reagan’s defunding and disabling of enforcement agencies, something the executive branch could do without Congressional cooperation, was particularly consequential) , were not rolled back but merely paused or even Congressionally abetted under Clinton’s regime, and were redoubled to near absurdity under W’s Congressionally well-supported incompetence.

 

 

I can recall from several years ago – after Reaganomics took hold, but before any crash in US banking other than early deregulation benefitee S&Ls – reading an interview in my local newspaper with an upper level executive spokesman from 3M, a large and influential corporation headquartered locally, in which he was asked about corporate taxation’s influence. He said, for attributed quotation, that 3M only paid US corporate income taxes at all to avoid looking bad - they were capable of adjusting their accounting and financials to eliminate their tax burden entirely, as many other corporations like theirs (multinational, Defense business, varied products, etc) had, but felt that the possible resultant bad publicity was worth avoiding.

 

 

GE is a major Defense contractor, and thoroughly corrupt as well as corrupting in consequence (during the hog-trough years of early Reaganomics GE abandoned its former reliance on market competition through innovation and productivity and the like, and from a long reign as #1 in the world at bringing new stuff to commercial markets is no longer in the top 20).

 

 

http://www.corpwatch.org/section.php?id=16

 

And we notice in passing that if GE merely would have to pass along levied taxes to its customers, as some here assert, somebody should inform their management of this - the amount of money they spend lobbying Congress for tax breaks and loopholes is too significant to throw away in stuff that makes no difference, and immorally depriving their shareholders of dividends rightly theirs.

 

Which is only to say that the overseas dodging is not itself new, only its comparative scale among the many tax dodges of the Reagan Era, now hopefully tumbling to its rest in a pile of garbage and broken parts.

 

Which would only mean we would have to start digging ourselves out, but let's hope for it anyway.

 

edit in: this is just to forestall whining about the horrible unfairness of US taxation on US companies:

 

http://ctj.org/corporatetaxdodgers/

 

And to all this I reiterate that, absent any actual law-breaking, IMO it's the system that needs to be fixed. Hate the game, not the player.

 

However, if you close loopholes and make corporations pay a higher tax it invites another problem. The issue of moving jobs overseas. Why should a company be headquartered here if they can operate out of another country and export goods here? The basic goal of a company is to make a profit.

[overtone]

And to all this I reiterate that, absent any actual law-breaking, IMO

it's the system that needs to be fixed. Hate the game, not the player.

It's a scam, not a game, and I see no reason to absolve the creators and perpetrators and beneficiaries of corruption and scam from blame for their doings - and the consequences of them.

 

However, if you close loopholes and make corporations pay a higher tax

it invites another problem. The issue of moving jobs overseas. Why

should a company be headquartered here if they can operate out of

another country and export goods here?

1) Where are they going to go? As I took the trouble to quote as well as link, above, they currently pay a third more on their foreign earnings - the other countries in which they can actually make money, and nto just dodge taxes. The US has at least that much room before creating a tax incentive to actually move.

2) If they want US market privileges and all the advantages of US basing - which GE, for one, would not survive without - they will jsut have to pay the freight. This is a country, a nation, not a charity home for indigent widget makers.

3)) The current tax and government policies favor the export of regular jobs and the keeping of the ripoff executive class in comfort and style - the worst of both worlds. Why should they keep jobs here, where the major advantage is the tax breaks for the rich and there are few barriers for importing their stuff from elsewhere? We would probably be better off with the good jobs here and the politically damaging and corrupting headquarters elsewhere, if we really have to make that kind of choice. Maybe if we really sock them, make them actually pay for their wars and their bullshit, we can get that entire sorry pack of wingnut gouge artists to actually move out of Delaware and South Dakota to the Caymans or Dubai or Bumfuck Notaxes Wherever and set there asses down where they claim to be on paper anyway..

 

They are damn expensive to keep around here. Think back to the politicians and policies and judges and lawsuits and media operations and public endeavors that have been imposed on this country by the executive class of our major corporations over the past forty years now - as Bill Maher put, an entire Who's Who of What The Fuck.

Edited March 19, 2013 by overtone

[swansont]

overtone, on 19 Mar 2013 - 15:35, said:

It's a scam, not a game, and I see no reason to absolve the creators and perpetrators and beneficiaries of corruption and scam from blame for their doings - and the consequences of them.

Where is the vote of GE, or any other corporation, recorded in the roll call when a bill is passed?

 

overtone, on 19 Mar 2013 - 15:35, said:

1) Where are they going to go? As I took the trouble to quote as well as link, above, they currently pay a third more on their foreign earnings - the other countries in which they can actually make money, and nto just dodge taxes. The US has at least that much room before creating a tax incentive to actually move.

That statistic is a bit of sleight of hand. It's no the tax rate paid, it's the incremental tax paid on the next dollar. Let's say a company makes $1 million profit domestically and $1 million in a foreign subsidiary. Domestically they get some tax breaks and pay just 10% on that money, and the foreign country taxes them at 15%. You pay 50% more foreign tax — why not generate that profit domestically? Partly because the US tax rate is still 35%. You've already applied your tax breaks to get that 10% effective rate; you can't arbitrarily claim that the other $1 million would also be subject to just a 10% tax rate.

 

There is also the issue that by making the products overseas it's easier to gain access to overseas markets. Probably partly for the same reason that Japanese and German car manufacturers make cars in the US.

overtone, on 19 Mar 2013 - 15:35, said:

2) If they want US market privileges and all the advantages of US basing - which GE, for one, would not survive without - they will jsut have to pay the freight. This is a country, a nation, not a charity home for indigent widget makers.

But what claim should the US have for widgets made outside of the US, and sold outside of the US? Exactly what advantages/charity is being applied here?

overtone, on 19 Mar 2013 - 15:35, said:

3)) The current tax and government policies favor the export of regular jobs and the keeping of the ripoff executive class in comfort and style - the worst of both worlds. Why should they keep jobs here, where the major advantage is the tax breaks for the rich and there are few barriers for importing their stuff from elsewhere? We would probably be better off with the good jobs here and the politically damaging and corrupting headquarters elsewhere, if we really have to make that kind of choice. Maybe if we really sock them, make them actually pay for their wars and their bullshit, we can get that entire sorry pack of wingnut gouge artists to actually move out of Delaware and South Dakota to the Caymans or Dubai or Bumfuck Notaxes Wherever and set there asses down where they claim to be on paper anyway..

No disagreement from me. Fix the system.

[overtone]

 

Where is the vote of GE, or any other corporation, recorded in the roll call when a bill is passed?

Every time their purchased and lobbied and influenced Congressmen open their yaps.

 

Let's say a company makes $1 million profit domestically and $1 million
in a foreign subsidiary. Domestically they get some tax breaks and pay
just 10% on that money, and the foreign country taxes them at 15%. You
pay 50% more foreign tax — why not generate that profit domestically?
Partly because the US tax rate is still 35%. You've already applied your
tax breaks to get that 10% effective rate; you can't arbitrarily claim
that the other $1 million would also be subject to just a 10% tax rate.

I'm just pointing out that we have plenty of room to get rid of a lot of those "tax breaks" domestically, without driving them overseas on that account.

 

And we'd probably be better off if they were headquartered in that foreign country, corrupting that government to get their tax breaks and paying 15% on their million here.

 

 

But what claim should the US have for widgets made outside of the US, and sold outside of the US?

None. But that's not what we're talking about. We're talking about them rigging their books to lower their tax bill, in collusion with the US government and at the expense of the US citizenry.