By Dave Johnson/Common Dreams
There is a push underway for a huge corporate tax break from the next administration.
Multinational corporations owe more than $720 billion in taxes on profits stashed in tax havens. They are proposing to bring those profits back if the government lets them pay only a fraction of what’s owed.
This is being sold as a “tax bonanza” to pay for infrastructure. Actually it’s a “tax-break bonanza” for corporations. Don’t be bamboozled.
“Clinton Readies Post-Election Push on Highways, Corporate Taxes,” Bloomberg Politics reported this week. To wit:
Clinton says on her website that in her first 100 days as president she’ll seek approval of the “biggest investment in American infrastructure in decades,” creating tens of thousands of jobs. Gene Sperling, a Clinton economic adviser, said that a $275 billion infrastructure plan would be among her top three domestic priorities at a forum this month sponsored by the National Association for Business Economics.
This is absolutely the right thing to do and would get her presidency off to a great start. We badly need to repair our aging infrastructure, because the economy could use it and because of all the jobs it creates. Good for Clinton.
(Of course, the need is much, much more than $275 billion. The American Society of Civil Engineers’ Infrastructure Report Card estimated in 2013 that we need to spend $3.6 trillion just to get things back in shape, never mind modernized.)
Still, $275 billion is an excellent down-payment on the problem. But where will the $275 billion come from?
Clinton has said she would finance infrastructure spending through unspecified “business tax reform.” Incoming Senate Democratic Leader Chuck Schumer of New York said on CNBC Oct. 18 that the money would come from a lower tax rate on profits stashed overseas by U.S. corporations. Other Democrats close to the Clinton camp said they anticipate she would adopt the Schumer approach.
Uh oh. The Schumer approach?
The lower tax rate would produce a one-time bonanza as companies brought home an estimated $2.5 trillion stockpiled abroad.
Obama proposed an infrastructure plan financed by a one-time 14 percent tax rate on overseas profits returned to the U.S. instead of the current 35 percent maximum rate. Congressional Republicans previously proposed an 8.75 percent rate on repatriated cash.
Goldman Sachs Group Inc. said in a recent report that Obama’s plan would have yielded at least $240 billion for the government to spend.
Wait. Back up. These corporations owe more than $720 billion in taxes. What’s this “one-time 14 percent tax rate?” The corporate tax rate is 35 percent (it was reduced from 52% in 1983) and 35% is what all the companies that didn’t dodge their taxes paid. Why do these tax-dodgers get to pay only 14%?
Shouldn’t the tax-dodging corporations pay what they owe – and pay a fine for tax-dodging – instead of getting a huge tax break?
Collecting $240 billion when they owe more than $720 billion is not a “tax bonanza” in any way, shape or form. It is a huge, giant tax break for the giant corporations that dodged their taxes. Here is a word problem: How much money is $720 billion minus $240 billion? (Hint: this would save $480 billion cash to corporations as a reward for dodging their taxes while other corporations paid what they owed.)
Here is another word problem for you: Which of the following is more for We the People to do things like repair our infrastructure, $720 billion or $240 billion? (Hint, $720 billion is more than $240 billion.)
Closing the loophole that lets these companies get away with stashing profits in tax shelters and then collecting the $720 billion they owe us – and another $90-$100 billion every year thereafter – would be the true tax bonanza (if you can call the receipts from fair taxation a “bonanza.”)
Make these tax-dodging corporations pay the taxes they owe us. They don’t deserve a huge tax break; they deserve a huge fine. Simple as that.
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Previously in Tax Scammage:
* Deepwater Horizon Settlement Comes With $5.35 Billion Tax Windfall.
* Offshoring By 29 Companies Costs Illinois $1.2 Billion Annually.
* Government Agencies Allow Corporations To Write Off Billions In Federal Settlements.
* The Gang Of 62 Vs. The World.
* How The Maker Of TurboTax Fought Free, Simple Tax Filing.
* $1.4 Trillion: Oxfam Exposes The Great Offshore Tax Scam Of U.S. Companies.
* How Barclay’s Turned A $10 Billion Profit Into A Tax Loss.
* Wall Street Stock Loans Drain $1 Billion A Year From German Taxpayers.
* German Finance Minister Cries Foul Over Tax Avoidance Deals.
* Prosecutor Targets Commerzbank For Deals That Dodge German Taxes.
* A Schlupfloch Here, A Schlupfloch There. Now It’s Real Money.
* How Milwaukee Landlords Avoid Taxes.
* Study: 32 Illinois Fortune 500 Companies Holding At Least $147 Billion Offshore.
* Watch Out For The Coming Tax Break Trickery.
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Previously in the Panama Papers:
* The Panama Papers: Remarkable Global Media Collaboration Cracks Walls Of Offshore Tax Haven Secrecy.
* The Panama Papers: Prosecutors Open Probes.
* The [Monday] Papers.
* Adventures In Tax Avoidance.
* Mossack Fonseca’s Oligarchs, Dictators And Corrupt White-Collar Businessmen.
* Jonathan Pie, TV Reporter! They’re All In It Together.
* Meet The Panama Papers Editor Who Handled 376 Reporters In 80 Countries.
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Previously in the carried interest loophole:
* Patriotic Millionaires Vs. Carried Interest.
* The Somewhat Surreal Politics Of A Private Equity Tax Loophole Costing Us Billions (That Obama Refused To Close Despite Pledging To Do So).
* Fact-Checking Trump & Clinton On The Billionaire’s Tax Break.
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Comments welcome.
Posted on October 29, 2016