shell games

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As the new report "Offshore Shell Games 2016" indicates, "Overall, multinational corporations use tax havens to avoid an estimated $100 billion in federal income taxes each year." The downside, of course, is that "when corporations don't pay what they owe, ordinary Americans inevitably must make up the difference:"

In other words, every dollar in taxes that corporations avoid must be balanced by higher taxes on individuals, cuts to public investments and services, and increased federal debt.

"Most of America's largest corporations maintain subsidiaries in offshore tax havens," the report observes:

At least 367 companies, or 73 percent of the Fortune 500, operate one or more subsidiaries in tax haven countries [and] these 367 companies maintain at least 10,366 tax haven subsidiaries.

For those keeping score at home, that's 28 for each corporation, but it gets worse:

A Citizens for Tax Justice analysis of 27 companies that disclose subsidiary data to both the Securities and Exchange Commission (SEC) and the Federal Reserve revealed that weak SEC disclosure rules allowed these companies to omit 85 percent of their subsidiaries on average. If this rate of omission held true for the entire Fortune 500, the number of tax haven subsidiaries in reality could be nearly 55,000, rather than the 10,366 that are being publicly disclosed now.

(That would bring the average up to almost 150 tax havens per Fortune 500 firm.) Crooks and Liars notes that "Congress - for obviou$ rea$on$ - refuses to stop this 'deferral' loophole:"

And then these same companies fund "think tanks" and other propaganda mills that tell us we have a huge budget "deficit" and "debt" problem and therefore need to cut spending on things that make people's lives better.

It's almost all a sham, though:

For many companies, increasing profits held offshore does not mean building factories abroad, selling more products to foreign customers, or doing any additional real business activity in other countries. Instead, many companies use accounting tricks to disguise their profits as "foreign," and book them to a subsidiary in a tax haven to avoid taxes. [...] The 298 Fortune 500 companies that report holding offshore cash had collectively accumulated more than $2.49 trillion that they declare to be "permanently reinvested" abroad.

That's rather reminiscent of the $1.8 trillion in cash that corporations were hoarding while the rest of us dug out from the Great Recession. As far as proposing solutions, the reports offers a few:

The most comprehensive solution to ending tax haven abuse would be to stop permitting U.S. multinational corporations to indefinitely defer paying U.S. taxes on profits they attribute to their foreign subsidiaries. In other words, companies should pay taxes on their foreign income at the same rate and time that they pay them on their domestic income. Paying U.S. taxes on this overseas income would not constitute "double taxation" because the companies already subtract any foreign taxes they've paid from their U.S. tax bill, and that would not change. Ending "deferral" could raise up to $1.3 trillion over ten years, accord¬ing to the U.S. Treasury Department.

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This page contains a single entry by cognitivedissident published on October 7, 2016 12:50 PM.

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