The so-called repatriation tax holiday makes the tension between corporate power and the general interest crystal clear.
US multinationals are simply shifting profits offshore – and now they want to bring them back nearly tax-free. It’s a travesty. http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html.
The multinationals argue that getting this tax break will allow them to hire workers. But this argument has three problems. First, corporations have plenty of cash already. Second, we tried this kind of amnesty before, in 2004’s Great American Jobs Act Tax Caper (see Charles I. Kingson’s article in the Tax Law Review) and they just distributed the cash to shareholders. Third, if we let the multinationals get away with this money grab, they’ll be back again and again. Plus all the conventional wisdom is that small companies are the ones that create the jobs.
If this is a done deal, Congress should at least (1) push to end future deferral of U.S. tax on foreign earnings to prevent future amnesties, (2) push for a repatriation rate of 20 percent or more, and (3) reject any face-saving tracing of funds: money is fungible, and tracing it is futile.
Somebody has got to pay for government. Singling out huge multinationals for a tax break does not seem like a good idea right now.
Protesters drew attention at a rock concert recently. Their complaint? Rock stars who move to tax havens to avoid paying taxes.
“‘Tax(es) nestling in the band’s bank account should be helping to keep open the hospitals, schools and libraries that are closing all over Ireland,'” Art Uncut member Charlie Dewar said ahead of the protest.
“U2, [Ireland]’s most successful band, was heavily criticised in 2006 for moving its corporate base from Ireland to the Netherlands, where royalties on music incur virtually no tax.”
Nonviolent protests, I’m for.
What about corporations that shift income to tax havens? Where, as Bob Dole once asked, is the outrage?
Back in the 1980s President Reagan signed an income tax treaty with China in Beijing so as to prove his trip a success. The treaty was a mess: Treasury negotiators had orders to produce a treaty for him to sign, and they did — with huge giveaways to corporations that artificially routed transactions through China. See http://ia600409.us.archive.org/16/items/preparedstatemen1185ogle/preparedstatemen1185ogle.pdf.
But signing does not a treaty make. The Senate must approve it. The most liberal Senator, Howard Metzenbaum of Ohio, put a hold on the treaty for allowing giveaways to multinational corporations; the most conservative Senator, Jesse Helms of North Carolina, put a hold on it for being too lenient with Red China. Those holds stopped the treaty in its tracks. Treasury went back, renegotiated, and eliminated the loopholes. Eventually, the repaired treaty came back to the Senate and sailed through.
Now the most liberal and the most conservative members of the U.S. House of Representatives join forces against the status quo.
Barney Frank and Ron Paul propose legalizing marijuana. http://ca.news.yahoo.com/lawmakers-introduce-bill-legalize-marijuana-225335489.html. Time will tell how this turns out.
The American public views foreign aid as the kind of spending the Government should cut. I’ll venture that few understand the aid that the Tax Code supplies for the foreign operations of U.S. companies. This aid is exemplified by General Electric’s manipulation of the Code to use foreign operations to reduce its U.S. tax bill. It is explained in great detail in Edward D. Kleinbard’s “Stateless Income,” downloadable at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1791769.
Here’s the antipathy to foreign aid, from http://www.economist.com/blogs/democracyinamerica/2010/04/economistyougov_polling:
Folks like to point out that the USA has an unusually high corporate tax rate (35 percent). But they don’t mention:
(1) Some say our corporate taxes paid as a percentage of GDP are about average. See http://www.oecd.org/dataoecd/48/27/41498733.pdf (Table B); that’s thanks to loopholes — or call them special rules. Bruce Bartlett says ours are the lowest among developed countries. http://economix.blogs.nytimes.com/2011/05/31/are-taxes-in-the-u-s-high-or-low/
(2) We don’t have a VAT. All other developed countries do.
North Carolina Governor Bev Perdue has come out against selling the State liquor monopoly. Good for her. Selling income-producing assets to plug revenue holes looks shortsighted. What’s next, selling Mount Mitchell State Park, http://www.ncparks.gov/Visit/parks/momi/main.php? Jockey’s Ridge, http://www.jockeysridgestatepark.com/? Hanging Rock, http://www.ncparks.gov/Visit/parks/haro/main.php?
Yes, we need to clean up the mess in the ABC system, but the free enterprise theoreticians who want private choice to rule supreme always and everywhere shouldn’t cause us to confuse the baby with the contents of the bathtub, be they water or gin. The profit motive is a powerful force, and we the people have the power and the duty to channel it. (That’s my opinion.) Continue reading Keep the Liquor Monopoly