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Watch Out For The Coming Corporate Tax-Break Trickery

By Dave Johnson/Common Dreams

One of the biggest fights coming up in the newly elected Congress next year will be “corporate tax reform.”
If you follow policy news you’ve been hearing that Congress wants to “reform” corporate taxes (again). When you hear talk of “reform” from our corporate-captured Congress it means you need to run as fast as you can – and organize. The way they use the word, it always means give them more and We, the People get less.


Schumer Talking About Massive Break On Taxes Corporations Already Owe
Sen. Chuck Schumer (D-Wall Street) might be Senate Majority Leader after the election. In a CNBC interview last week he said he is hoping to work with Republican House Speaker Paul “Gut the Government” Ryan on “some kind of international tax reform tied to a large infrastructure program.” In the interview Schumer said:

If you can get overseas money to come back here, even if it’s at a lower rate than the 35 it now comes back at, and you can use that money for a major constructive purpose such as infrastructure, if you did an infrastructure bank, for instance, you could get $100 billion in equity in the bank and get a trillion dollars of infrastructure.

When Schumer says “at a lower rate” he is talking about a “tax holiday” allowing corporations to pay less than the 35% tax rate they owe (minus deductions for taxes already paid overseas) on some $2.5 trillion of profits they have stashed in “overseas” tax havens. These corporations owe around $720 billion or so on those profits. So rewarding them for tax dodging with a lower tax rate means handing them up to hundreds of billions of dollars that the country needs for schools, health care and yes, infrastructure repair.
These tax-dodging, multinational corporations used schemes and tax havens to dodge paying taxes they owe. Meanwhile other corporations – usually smaller, domestic companies – paid their taxes. This gave the multinational corporations an advantage over the honest, domestic companies.
So why should Congress reward tax-dodging, multinational corporations by letting them keep some of the taxes they dodged, thereby punishing the domestic corporations that did the right thing for the country? See if you can guess why. (Hint: the tax-dodging corporations have “captured” Congress using a portion of that money.)
Revenue Neutral?
The corporations are also trying to sell “tax reform.” This “reform” is really just another huge corporate tax cut that is explained as a “revenue neutral” deal to “cut corporate tax loopholes” and use the resulting revenue to cut the corporate tax rate. The term “revenue neutral” means the tax revenue coming to the government stays the same. “Revenue neutral” sounds like a good deal but in reality it’s just a trick. It means taxes go up for some companies but way, way down for others. Guess which companies lose out. (Hint: it won’t be the giant multinational corporations that have captured Congress.)
The top corporate tax rate used to be 52 percent. Under Reagan it was 46 percent. Then Congress “reformed” taxes and dropped the rate to 35 percent. Corporations used to shoulder 32 percent of the total tax burden. It has fallen to only 10 percent of the burden. That is a drop of two-thirds. See if you can guess who pays that two-thirds difference. (Hint: it isn’t corporations or their wealthy owners. It is cuts to schools, infrastructure, health care and all the things that used to make our lives better. This is one part of the economic squeeze everyone feels.)
On top of that they are also trying to sell a scheme that lets them off the hook for profits made outside of the country. See if you can guess how fast every corporation moves its profit centers and production out of the country if that passes. (Hint: every single corporation will move every job, factory, profit center, etc. out of the country if that passes.)
What Budget Deficit And Debt?
Our country has a budget deficit and a large debt caused by tax cuts and wars. The current hysteria over deficits is driven by corporate-and-billionaire-funded PR “think tanks” that pump out propaganda and hysteria 24/7/4/12. Can you guess what 24/7/4/12 means? (Hint: 24 hours, 7 days, 4 weeks, 12 months of the year.)
With a budget deficit and a large debt the fact is that a “revenue neutral” tax reform for corporations who have already had their tax rates cut and cut and cut is the very last thing the country needs to do. What we need to do instead is close that loophole that lets giant, multinational corporations hide $2.5 trillion in profits in “overseas” tax shelters, and make them pay the $720 billion or so of taxes they owe now, plus the $90-100 billion or so of taxes they will dodge every year after. Period.
Revenue neutral, schmeutral. Just make these giant, tax-dodging, multinational corporations pay what they owe. Don’t reward them for tax-dodging. And restore the 52% corporate tax rate instead of cutting it even further.
P.S:. Take a look at this Fact Sheet: Corporate Tax Rates from Americans for Tax Fairness.
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.

Dave Johnson is a contributing blogger for the Campaign for America’s Future.

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.

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.

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.

Comments welcome.

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Posted on October 25, 2016