America’s Recipe For Disaster: How New Corporate “Amnesty” Plan Could Doom The Economy - Salon

[WillyT]

America’s recipe for disaster: How new corporate “amnesty” plan could doom the economy
This new budget deal could have an ugly underside. Here's how the right's scheming to help corporations avoid taxes
David Dayen - Salon
Tuesday, Feb 3, 2015 03:59 AM PST

<snip>

For over a decade, corporations have hoarded profits overseas, basically blackmailing the country into letting them return the money to the United States at a lower tax rate. Now, with the presentation of President Obama’s budget, virtually everyone in Washington agrees this should happen, to “pay” for public works projects; the only real difference is in the details.

This leads to a strange double standard. When undocumented immigrants get a path to citizenship it’s called “amnesty”; when corporations get to keep profits at a drastically reduced tax rate, a literal amnesty from the law, it’s called a sound jobs policy. But the emerging deal could actually reduce investment and jobs, by indicating to corporations that they can dodge taxes and win a special exemption years later.

The first “repatriation tax holiday” occurred in 2004. The United States, unique among developed nations in taxing foreign corporate profits, only collects the tax when those funds are repatriated into the country. In 2004, Congress allowed corporations to bring that money home at a 5.25 percent rate, well below the 35 percent standard.

Supporters said the tax amnesty would spur corporate investment and economic growth. But a 2009 report from the Senate Permanent Subcommittee on Investigations showed that the top 15 companies benefiting from the holiday cut over 20,000 jobs and lowered investment in subsequent years. Most of the repatriated money went to shareholders in dividends or stock buybacks, or to executives in compensation packages.

Once corporations figured out they could successfully lobby for amnesty, they spun more and more of their profits off as “overseas” gains. Multinationals made liberal use of tax havens, and used accounting gimmicks like patent licensing or on-paper changes of their corporate headquarters through “inversions” to move profits into subsidiaries in low-tax countries. By the end of 2013, corporations had more than $2 trillion stashed overseas.

Essentially, these corporations made a bet that they could game the tax code, and use their power and influence to secure amnesty after the fact. It took longer for Congress to comply with their desires. But the stars seem aligned this year.

<snip>

More: http://www.salon.com/2015/02/03/americas_recipe_for_disaster_how_new_corporate_amnesty_plan_could_doom_the_economy/

[Teutonic Samuel]

1. Corporate America has ALREADY Doomed the Economy

Now they're just wanting to chew on the remaining pieces of flesh, like the vultures they are.

[Thatmoderateguy]

2. Of course they're going to try to avoid taxes.

It's simple economics. A firm is going to try to cut costs. This is going to remain a problem until our tax code is simplified and corporate taxes lowered to be competitive with the rest of the developed world. We rely on corporate taxes and yet, force them away.

[woo me with science]

3. And the influx continues...

The influx of corporate propaganda-spouting personas is steady and unnatural:

http://www.democraticunderground.com/?com=view_post&forum=1002&pid=4216987
http://www.democraticunderground.com/?com=view_post&forum=1002&pid=3189367

States that build surveillance machines also build propaganda machines.

[Thatmoderateguy]

4. I'm not a propagandist.

I'm just pointing out a major flaw in our tax code. The U.K.'s corporate tax peaks at 21% ours at 35%. Where would you headquarter?

[nakocal]

6. This would be true except for tax loopholes

This is only true is there were no tax loopholes for the corporations to take advantage of. And the corporations will NEVER agree to give up the loopholes. So your 35% is bullshit since most pay under 10% and several multi-billion dollar profit corporation actually get rebates.

[Thatmoderateguy]

7. Eh.

The closing of loopholes is why I said simplify the code. Not all corporations apply for all loopholes. You also forget non federal taxes that can be levied. Corporations bear most of this nations tax burden regardless of the percentage. Ie we need their money so incentives to operate here would ultimately increase the tax pool and lower the individual burden for everyone especially the middle class. You don't need to get angry, dude. I'm just expressing economic theory.

[cyberswede]

8. Do you have a link that supports that?

I was under the impression that individual income taxes provide most of the U.S. tax revenue ("burden" is a loaded word, btw).

Almost half of all federal revenue (47 percent) comes from individual income taxes. The income tax is generally progressive: higher-income households pay a larger share of their income in income taxes than lower-income households do.

Another 34 percent of revenue comes from payroll taxes, which are assessed on the wage or salary paychecks of almost all workers and used to fund Social Security, Medicare Hospital Insurance, and unemployment insurance. By law, employers and employees split the cost of payroll taxes, but research has shown that employers pass their portion of the cost on to workers in the form of lower wages.

Payroll taxes as a whole are regressive: they collect a higher percentage of total earnings from lower-income workers than higher-income ones. However, if one looks at the overall impact of Social Security, Medicare, and unemployment insurance — the benefits they provide as well as the taxes they collect — these programs are progressive. (See our related Policy Basics: Top Ten Facts About Social Security and Policy Basics: Federal Payroll Taxes).

Corporate income taxes make up about 10 percent of federal revenue, with the remaining 9 percent coming from excise taxes, estate taxes, and other taxes. Excise taxes are collected on the sale of certain goods (e.g., fuel, alcohol, and tobacco); they are intended to raise revenue and, in some cases, discourage consumption of the taxed product. These made up about 3 percent of federal receipts in 2013.

http://www.cbpp.org/cms/?fa=view&id=3822

[Thatmoderateguy]

9. It's more complicated than that.

Respectfully,
Burden isn't loaded. If people didn't think taxes were a burden they wouldn't mind them being raised on themselves.
Furthermore, a lot of the problem with your numbers is that they are too simple. Ten percent is paid outright. Another 17% comes from the payroll taxes. Then you account for those who make more than $350,000 and pay income tax you're let with on percent of the population paying most taxes. So, even with the simplest numbers businesses pay 27% of the taxes.

http://taxfoundation.org/blog/top-1-percent-pays-more-taxes-bottom-90-percent

[cyberswede]

11. Krugman: "The Tax Foundation is not a reliable source"

http://krugman.blogs.nytimes.com/2008/08/24/the-tax-foundation-is-not-a-reliable-source/

and

http://economistsview.typepad.com/economistsview/2008/08/the-greek-menac.html

Next, from Linda Beale:

The Tax Foundation is busy again pushing its latest propaganda idea--that the US has such high corporate taxes that it stifles competition and hurts our economy--with a new "competeusa.com" organization.

Wrong. Fact is, though our tax laws include statutory rates that are fairly high (35% for corporations earning about $18 million or more annually) but generally in the same ballpark as those of other developed western nations, the actual tax rates paid by US corporations are extraordinarily low, around 6%. Remember the latest GAO report (reported elsewhere on ataxingmatter) that shows that two-thirds of US corporations pay no federal income tax. That's not just the ones that are losing money, but also many corporations that have record high profits (including some Big Oil companies) that end up paying next to nothing in taxes.

...

As a result, the US is actually a corporate tax haven, with the lowest effective corporate tax rates of almost all the countries that participate in the OECD. That's a little fact that the Tax Foundation apparently doesn't want the American public to understand, since all its hype is in terms of statutory rates and not in terms of effective tax rates.

[Thatmoderateguy]

15. You don't have to accept it.

But it's the truth like it or not. If it wasn't I doubt POTUS would have given a speech calling it unpatriotic for businesses to leave. They are the core of our tax base and tend to employ more Americans than uncle joe's organic fruit stand. They're leaving and it's the middle class that's being left to take the hit.

[Thatmoderateguy]

16. And a partisan blogger isn't reliable either. FOH

[uppityperson]

17. What does "FOH" mean? Front of house?

[Raine1967]

20. F*ck Outta Here.

This poster seems to believe that Krugman is just a 'partisan blogger'

[Kingofalldems]

19. So with that reply you seem to admit your conservative

think tank link isn't reliable.

[cyberswede]

24. LOL

Last edited Thu Feb 5, 2015, 10:05 PM - Edit history (1)

Paul Robin Krugman (born February 28, 1953) is an American economist, Professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, Distinguished Scholar at the Luxembourg Income Study Center at the CUNY Graduate Center, and an op-ed columnist for The New York Times.[2][3] In 2008, Krugman won the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography.

"partisan blogger"

[Kingofalldems]

18. Why do you link to a conservative think tank on a

Democratic site?

http://en.wikipedia.org/wiki/Tax_Foundation

[Raine1967]

21. +1 n/t

[marble falls]

23. Respectfully, your shorthand sentences lacked any real clear meaning, so it was your last sentence..

that got me, "So, even with the simplest numbers businesses pay 27% of the taxes. " Assuming thats true, and its not - 1/3 of corporations paid any income taxes, Romney paid less than 14% - how would 1% owning at fifty percent of whats owned only be paying 27% of the taxes? How does that seem right? 'Splain that.

[Thatmoderateguy]

10. I'm also looking at a simple little graph in one

Of my economic textbooks and it shows the top 1% paying right at 38% of the individual income taxes.

[woo me with science]

5. Corporate governments don't represent human beings.

They exploit "human resources" for profit.

We don't matter to them except as entries on a profit ledger, and we will be discarded like husks when they are finished with us.

[raouldukelives]

12. One thing is for sure. The more money they have, the less democracy we have.

Some work for justice, some for peace, some for themselves and some for the least.

[woo me with science]

14. +1

[Octafish]

13. If the US Corporations don't bring the loot back, tax them.

Tax Offshore Wealth Sitting In First World Banks

James S. Henry
07.01.10, 09:00 AM EDT
Forbes Magazine dated July 19, 2010

Let's tax offshore private wealth.

How can we get the world's wealthiest scoundrels--arms dealers, dictators, drug barons, tax evaders--to help us pay for the soaring costs of deficits, disaster relief, climate change and development? Simple: Levy a modest withholding tax on untaxed private offshore loot.

Many aboveground economies around the world are struggling, but the economic underground is booming. By my estimate, there is $15 trillion to $20 trillion in private wealth sitting offshore in bank accounts, brokerage accounts and hedge fund portfolios, completely untaxed.

SNIP...

This wealth is concentrated. Nearly half of it is owned by 91,000 people--0.001% of the world's population. Ninety-five percent is owned by the planet's wealthiest 10 million people.

SNIP...

Is it feasible? Yes. The majority of offshore wealth is managed by 50 banks. As of September 2009 these banks accounted for $10.8 trillion of offshore assets--72% of the industry's total. The busiest 10 of them manage 40%.

CONTINUED....

http://www.forbes.com/forbes/2010/0719/opinions-taxation-tax-havens-banking-on-my-mind.html

And if they don't pay their share, tax them out of existence.

[marmar]

22. K/R