Tag Archives | corporate weasels

Corporate Cayman Islands tax shelters rip off U.S. taxpayers

*”Corporations are people, my friend.”
–Mitt Romney, August 11, 2011

Statistic of the day: A single five-story office building is the registered address of more than 18,000 companies.

How is that possible? Well, the building is in the tax haven of the Cayman Islands, and most of those businesses are registered there only for tax purposes.

As Citizens for Tax Justice and the U.S. Public Interest Research Group Education Fund explained in a report earlier this year, more than 70% of the Fortune 500 had subsidiaries in tax havens in 2013. The report estimates that multinationals are using these subsidiaries to avoid approximately $90 billion in federal income taxes annually.

US companies reported $129 billion in earnings in the Cayman Islands, Bermuda, and the British Virgin Islands in 2010. “Assuming you believe those figures, the productivity of workers in those countries is amazing,” Floyd Norris, his tongue almost bursting out of his cheek, wrote in The New York Times. “On average, United States companies had profits of $873,611 per person living in those islands.”

Such ridiculous numbers are merely a product of the process by which multinationals can–legally–reduce their U.S. taxes. Currently there is no significant movement on Capitol Hill to close any of the loopholes or change the laws that make these moves possible.

Why do taxpayers think the tax code is rigged in favor of large corporations? Maybe because it is.

Multinationals seek tax heavens, er, havens . . . oh, what’s the diff?

More and more U.S.-based corporations are growing wings and flying away from their U.S. tax obligations.

Bloomberg puts it as simply as possible: “U.S. companies looking for lower tax bills are heading for the exits, and Congress is doing nothing to stop them.”

The immediate impetus for the story was Pfizer’s proposed purchase of AstraZeneca, which would result in Pfizer reincorporating in Britain while tapping literally billions of dollars it has been holding outside the U.S., as The New York Times reported.

What’s the solution? Congress could grow a set and change the tax laws so that there is a crackdown on companies that use tax havens to keep profits outside of the U.S. system, as Steven Rattner suggests. Rattner also suggests in essence giving up on taxing corporations and instead increasing taxes on profits at the shareholder level, which would effectively increase the taxes paid by the wealthiest Americans.

I don’t know what the solution is, but when you consider that the effective federal tax rate paid by corporations has dropped from more than 40% in the 1950s to about 15% today, it seems clear that something has to change.

Interns must be paid, says federal judge — so they may be useful, but they aren’t priceless

A big heads-up for any business that might be looking at interns as potential low-cost or no-cost employee substitutes this summer: A federal judge has told Fox Searchlight picture that interns who are actually useful to the business have to be paid.

Many employers think that interns don’t have to be paid as long as there is some “educational” component to the intern’s time with a company. Not so, said Judge William H. Pauley III, citing Department of Labor rules for internships. Basically, if the intern is doing work that is useful to the employer or is doing work that a regular employee would usually do, the intern has to be paid. Oh, and having the intern get college credit doesn’t relieve the employer from having to pay the intern.

The New York Times has all the bad news for employers and good news for interns here. You also can read the Labor Department’s Fact Sheet on internship programs–including the six, count ‘em, six, factors that have to be met in order for an intern to NOT be paid.

Are you going to believe what we say, or what your lyin’ eyes see?

Would you like an income tax rate of 5.25%? You have a chance–if you’re a major multinational corporation.

In 2005 the Bush Administration gave multinational corporations a big tax windfall, telling them that they could bring home profits that they had ‘parked’ abroad and pay only 5.25% in income taxes, instead of the usual top corporate rate of 35%. More than $300 billion flowed back, saving corporations around $100 billion.

The tax holiday was supposed to be an incentive for the corporations to increase their hiring in the U.S., but almost all the money wound up being used for dividends and stock buybacks, as the National Bureau of Economic Research reported. Some companies even used the money to increase their spending on closing domestic plants and laying off workers.

Now, as today’s New York Times reports , the corporations are pushing in Congress for another similar tax holiday, saying that it will–guess what?–create thousands of new jobs. The incredibly cynically-named WIN America (Working to Invest Now in America) Coalition wants a break on as much as $1 trillion–that’s Trillion with a T, as in One Thousand Billions–in profits.

This may be the ultimate corporate double-dip.

They were against Medicare until they were for it

Republicans kept banging on the idea of privatizing Medicare until, as The New York Times notes, it became clear just how big a non-starter that idea is with the American public. The shrink-the-government yahoos are apparently unyielding on their ideology until that ideology threatens their hold on the government.

Not only would privatizing Medicare eliminate the guarantee of health coverage that older Americans have come to expect, it wouldn’t even save money. In fact, it would probably DOUBLE the amounts spent on health care for seniors, as a Congressional Budget Office study revealed.

Where would all that money go? Well, if you privatize Medicare, you create a huge new market for…insurance companies. So the cutting government spending becomes a stalking horse for a more inefficient health care system, greater profits for insurance companies, and higher costs for average Americans.