Death and taxes are the two main constants in life. While most of us worry when April 15th comes a knockin’, the corporate CEOs take the Bobby McFarrin approach – Don’t Worry, Be Happy. The reason for this laid back attitude when it comes to paying the tax man is that they’ve got their money stashed in tax friendly places like the Cayman Islands and Bermuda. Senator Bernie Sanders (I-VT) and Representative Jan Schakowsky (D-IL) plan to put an end to it all. Today they introduced in their respective chambers the Corporate Tax Dodging Prevention Act.
According to figures that Sanders used from the CBO, if just 29 top corporate CEOs were forced to repatriate their earnings back to the U.S., the federal government would stand to rake in over $128 billion in tax revenue. That revenue would come from monies in excess of $395 billion stashed away by companies. If you take into account the Fortune 100 companies, there’s over $1.7 trillion hiding in tax havens. How do companies do this while the rest of us have to sweat it out every April?
One of the ways that corporations do that is through a loophole that allows companies to stash the money for as long as they like. As long as the money stays elsewhere, no taxes need to be paid. The bills that Sanders and Schakowsky are introducing closes that loophole. The second reason for this is a tax deduction that actually encourages companies to ship jobs overseas. Companies can write this off on their taxes due to costs that are incurred. While this makes sense if the company were in the U.S., it doesn’t make sense for use elsewhere. Not only are jobs lost with the company, but there’s also a ripple effect. Money that would have been paid for construction, utilities, and countless other feeder jobs and associated revenue to smaller companies is lost.
For the average person, these amounts are dizzying. So you may ask, ‘What does this mean to me?’ Besides the loss of revenues for the federal government, state and local governments lose out too. The result is you and I have to make up for those lost revenues. According to estimates by the New Mexico PIRG or the New Mexico Public Interest Research Group, the average taxpayer in New Mexico would have to pay an extra $206 in taxes. That’s nothing for a huge corporation, but that’s a lot for a family struggling to put food on the table. If put in terms of the cost for small business, it’s an extra $1,106 in taxes that they’ll have to pay to make up for loss in taxes.
It’s true that this legislation has a tough fight ahead. However, the fight may be less difficult this year as compared to last. People are starting to wake up and realize that even though they are a small fish in the sea with some very large fish, we learned that if we work together to pressure our legislators, we can make progress. If successful, these CEOs will no longer be whistling ‘Don’t Worry, Be Happy’, but instead the Beatles medley ‘Tax Man’.