Offshore Tax Havens – Say Hello To The Tax Man

Corporations munching on taxpayers

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?

 

Top Fortune 100 Companies tax havensOne 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’.

SC GOP Primary Gets the ABCNews Treatment

ABC News has a coup today, with two stories sure to impact the Presidential elections, featuring damaging stories about both GOP frontrunners Mitt Romney and Newt Gingrich.  Delicious!  Let’s start with Mitt:

Mitt Romney and the Cayman Islands

Sure, Jeff just wrote about Mitt Romney’s taxation and earning issues, which are mostly, and to that end most troubling, because they are about image.  15% effective tax rate?  $362K earnings that Romney refers to in an offhand way?  That’s not going to satisfy independent voters, though Romney likely violated no laws.  Still, image is everything.  So when ABCNews reports that Mitt Romney has uncounted millions of dollars stashed in the Cayman Islands in tax sheltered accounts, this isn’t going to help at all.  Indeed, the whole country is going to wonder if these accounts, which are also likely completely legal, don’t allow Mitt Romney to avoid paying taxes at all.  Perhaps next ABCNews can start reporting on the millions and millions of federal and state tax dollars Bain Capital took advantage of while looting all those companies, eh?  As Joshua Holland at Alternet notes, that sure ain’t free market capitalism.   I don’t suppose either of these issues will convince Romney supporters to jump off the bandwagon, but I’ll bet independent voters will shy from him even more now that it is clear Mitt Romney has been taking corporate welfare hand over fist in his career. 

The Jaguar Speaks about Newt Gingrich

Who is “The Jaguar?”  That’s Newt’s pet name for ex-wife Marianne Gingrich, according to how he referred to her when telling her he wanted a divorce.  From Esquire:

He wanted to talk in person, he said.

“I said, ‘No, we need to talk now.’ ”

He went quiet.

“There’s somebody else, isn’t there?”

She kind of guessed it, of course. Women usually do. But did she know the woman was in her apartment, eating off her plates, sleeping in her bed?

She called a minister they both trusted. He came over to the house the next day and worked with them the whole weekend, but Gingrich just kept saying she was a Jaguar and all he wanted was a Chevrolet. ” ‘I can’t handle a Jaguar right now.’ He said that many times. ‘All I want is a Chevrolet.’ “

We find out what the Jaguar has to say tonight on ABC’s Nightline.  This will definitely make for great theater.  “Woman scorned” is how the Gingrich camp is handling what project to be startling revelations by Marianne Gingrich, Newt’s second wife.  Here’s their take from the Washington Post

The Gingrich campaign must be nervous, because it issued a preemptive statement from his two daughters from his first marriage, Kathy Lubbers and Jackie Gingrich Cushman: “Anyone who has had that experience,’’ the statement said, referring to divorce, “understands it is a personal tragedy filled with regrets, and sometimes differing memories of events.’’ A Gingrich aide prophylactically pinned the tried-and-true tag for ex-wives on her, saying she was still “probably very bitter.”

The Post goes on to wonder what Marianne Gingrich’s revelations could be that they would have an effect so many years after the fact, but the Gingrich camp’s reaction certainly shows they are scared.  And that makes me gleeful. 

Ah yes, ABCNews is leading the way today, but there is more reporting on both these fronts to come, and we can only hope these GOP candidates get more and more damaged as they work their way through the primary process.  Will Ron Paul or Rick Santorum then have a chance?  We have to hope so, and they are each completely unelectable.