In the UK they estimated that tax evasion was costing the government 38.5 billion (Office of National Statistics Figures), Welfare mistakes and fraud where <5% of that figure.
You want to guess what they spent the most time passing legislation on?
It's the fault of the poor though they should hire better lobbyists (/s just in case).
This critique is always presented as reasonable and is almost offensively lazy.
Congress doesn't write rules in a vacuum. It's no coincidence that the laws always favor certain corporations of groups of corporations. Through lobbyists and organizations like ALEC, the companies who benefit from these loopholes are frequently the same parties who write the legislation. Obviously our lawmakers are complicit, but saying, "They're just following the rules" ignores that they usually write the rules too.
Separate from whether there is a need for change or improvements reports like this are simply ways to stir the masses.
There are legitimate reasons why companies do many things and for sure there is a continuum from dodging to legitimate. The problem is that reports like this present things as one sided as if everything is simply taking advantage of the system.
You can do this with any subject matter that people don't know about. And then everyone piles on because of course "we know these guys are bad and they don't do the right thing".
A few (small) examples:
"Fedex: Received $10.3 billion in federal contracts from 2006-2012"
Fedex bid on a government contract and was the low bidder or supplies a product or service that the government needs. It's really that simple. The tax that they pay or don't pay has nothing to do with this and making statements like that (to support one's position) is done simply to get "the jury on your side" by pulling at obvious heart strings.
"Microsoft: Saved $4.5 billion in federal income taxes from 2009-2011 by transferring profits to a subsidiary in the tax haven of Puerto Rico. Had $60.8 billion in profits stashed offshore in 2012 on which it paid no U.S. taxes; reported it would owe $19.4 billion if profits are brought home."
Puerto Rico was a tax haven for a reason. In particular many Pharma companies located operations in PR which created great benefit to that area. Now that those tax advantages have gone away PR has had deep problems. Simply trying to cherry pick things like this in order to prove a point isn't helpful.
"ExxonMobil: Paid just a 15% federal income tax rate from 2010-2012, less than half the official 35% corporate tax rate"
Seems to imply that companies are supposed to be paying 35% by comparing to that number. How many people, on personal income taxes, pay anywhere close to the "rack" rate? Note the use of "official" as if to imply "what they should be doing".
> Fedex bid on a government contract and was the low bidder or supplies a product or service that the government needs.
The implication is that Fedex is bidding on government contracts while actively avoiding paying taxes. Their bids would be less competitive if they had to account for paying the 'appropriate' rate.
> Puerto Rico was a tax haven for a reason. In particular many Pharma companies located operations in PR which created great benefit to that area.
Puerto Rico's unemployment rate has been above 10% for over 30 years. I suppose you can make the argument that it would be worse but for these tax havens, but good luck with that.
> How many people, on personal income taxes, pay anywhere close to the "rack" rate? Note the use of "official" as if to imply "what they should be doing".
Nearly everyone does. The majority of Americans (upwards of 65%) take standard deductions and their effective tax rate is identical to the prescribed rate based on their income. The next largest chunk take obvious deductions (mortgage, charity, etc.) but no further.
I'm increasingly of the opinion that there should be no corporate taxes. Instead there would have to be restrictions and incentives to encourage corporations to spend and not horde their cash.
The reason I've come to think this is seeing how multi-nationals are able to move their profits around the world to reach a corporate tax rate of 0, giving an unfair advantage when competing against local companies that must pay tax.
We already have profitable companies paying 0% tax - this would just give this advantage to non-multinationals.
I think I remember reading that that is something already being used as a loophole. So, closing the loopholes would have to include this particular strategy. I have no idea how that would be done or if our lawmakers will ever try to do so.
The Microsoft Puerto Rico tax dodge really irked me- by moving the build servers there the software becomes 'produced' in Puerto Rico? As if software R&D didn't have a large enough tax loophole.
16 comments
[ 3.6 ms ] story [ 37.2 ms ] threadYou want to guess what they spent the most time passing legislation on?
It's the fault of the poor though they should hire better lobbyists (/s just in case).
Well done Sir.
Congress doesn't write rules in a vacuum. It's no coincidence that the laws always favor certain corporations of groups of corporations. Through lobbyists and organizations like ALEC, the companies who benefit from these loopholes are frequently the same parties who write the legislation. Obviously our lawmakers are complicit, but saying, "They're just following the rules" ignores that they usually write the rules too.
There are legitimate reasons why companies do many things and for sure there is a continuum from dodging to legitimate. The problem is that reports like this present things as one sided as if everything is simply taking advantage of the system.
You can do this with any subject matter that people don't know about. And then everyone piles on because of course "we know these guys are bad and they don't do the right thing".
A few (small) examples:
"Fedex: Received $10.3 billion in federal contracts from 2006-2012"
Fedex bid on a government contract and was the low bidder or supplies a product or service that the government needs. It's really that simple. The tax that they pay or don't pay has nothing to do with this and making statements like that (to support one's position) is done simply to get "the jury on your side" by pulling at obvious heart strings.
"Microsoft: Saved $4.5 billion in federal income taxes from 2009-2011 by transferring profits to a subsidiary in the tax haven of Puerto Rico. Had $60.8 billion in profits stashed offshore in 2012 on which it paid no U.S. taxes; reported it would owe $19.4 billion if profits are brought home."
Puerto Rico was a tax haven for a reason. In particular many Pharma companies located operations in PR which created great benefit to that area. Now that those tax advantages have gone away PR has had deep problems. Simply trying to cherry pick things like this in order to prove a point isn't helpful.
"ExxonMobil: Paid just a 15% federal income tax rate from 2010-2012, less than half the official 35% corporate tax rate"
Seems to imply that companies are supposed to be paying 35% by comparing to that number. How many people, on personal income taxes, pay anywhere close to the "rack" rate? Note the use of "official" as if to imply "what they should be doing".
The implication is that Fedex is bidding on government contracts while actively avoiding paying taxes. Their bids would be less competitive if they had to account for paying the 'appropriate' rate.
> Puerto Rico was a tax haven for a reason. In particular many Pharma companies located operations in PR which created great benefit to that area.
Puerto Rico's unemployment rate has been above 10% for over 30 years. I suppose you can make the argument that it would be worse but for these tax havens, but good luck with that.
> How many people, on personal income taxes, pay anywhere close to the "rack" rate? Note the use of "official" as if to imply "what they should be doing".
Nearly everyone does. The majority of Americans (upwards of 65%) take standard deductions and their effective tax rate is identical to the prescribed rate based on their income. The next largest chunk take obvious deductions (mortgage, charity, etc.) but no further.
The reason I've come to think this is seeing how multi-nationals are able to move their profits around the world to reach a corporate tax rate of 0, giving an unfair advantage when competing against local companies that must pay tax.
We already have profitable companies paying 0% tax - this would just give this advantage to non-multinationals.
For example you pay an extra 20% over what a domestic company would pay in sales tax.
This would stem the flow of cash out of the local economy and give smaller companies leverage.