End Offshore Tax Havens
While many conservative politicians complain that corporate tax rates are too high, large businesses rarely pay the full 35 percent rate. Many conglomerates stash their profits overseas to evade taxes by establishing subsidiaries incorporated in foreign countries with laxer corporate tax policies. These companies exploit America’s infrastructure and government resources while avoiding their tax liability to maximize profits. The U.S. created the climate that allowed these corporations to prosper — and should be repaid for its role in their success.
Bernie has said:
“Instead of sheltering profits in the Cayman Islands and other offshore tax havens, the largest corporations in this country must pay their fair share of taxes so that our country has the revenue we need to rebuild America and reduce the deficit. At a time when corporations are making record-breaking profits, while the middle class is disappearing and senior poverty is on the rise, the last thing we should be doing is giving huge tax breaks to profitable corporations that don’t need it.”
I’m no economist. How do companies avoid paying taxes?
The short version is that companies claim that their profits are generated not by their U.S. headquarters or facilities but instead by a subsidiary in a locale with low corporate tax rates. (Bermuda and the Cayman Islands aren’t just vacation spots.) This often takes the form of a “corporate inversion,” which has become a common method of tax evasion. These are just a few examples of large American companies that have moved their nominal headquarters for this purpose:
Florida-based Burger King acquired and merged with Tim Horton’s, under the umbrella company Restaurant Brands International. Now based in Canada, it could avoid $117 million in U.S. taxes by never having to pay corporate income tax on foreign profits it holds offshore.
Ingersoll Rand reincorporated in Bermuda in 2002 and then relocated again to Ireland in 2009, all while keeping the bulk of its management and workforce in North Carolina.
Minnesota-based Medtronic, one of the world’s largest medical technology companies, acquired Ireland-based Covidien in 2014.
Another particularly egregious example of this strategy is known as a “double Irish” or a “Dutch Sandwich,” which cheats not only America out of tax revenue but also Ireland. This is done by shuffling profits and product origins between Ireland, the Netherlands, and the Cayman Islands or Bermuda. The Irish government has attempted to crack down on the scheme, but whether they will be successful remains to be seen.
I love companies like Amazon and Google. Why should I care?
For one thing, it costs you, as an American taxpayer! There’s an estimated $2.1 trillion in profits held in tax havens, which studies estimate amounted to $90 billion of lost tax revenue in 2014. In 2008 a U.S. Senate investigation put the figure at $100 billion. That’s roughly what our federal government spends on transportation each year. To put that in perspective, the Congressional Budget Office estimates that the cost of repairing all of the nation’s 604,493 bridges would be $76 billion.
This is also tremendously unfair, especially to American small businesses. These multinational corporations have built themselves up on the infrastructure and education system provided by the U.S. government and paid for by American citizens, but are now stashing their profits overseas to avoid repaying what they owe. Several of these corporations have taken advantage of not only our infrastructure, but also our bailout funds and tax breaks — all while keeping their profits overseas.
Taxing Capital Gains (Gasp!)
How much revenue can raising taxes on dividends and capital gains yield?
Bernie estimates that it will raise more than $500 billion over ten years. According to Citizens for Tax Justice, Bernie is being conservative in his estimate. They calculate that taxing capital gains at normal income tax rates would raise at least $613 billion over ten years. On top of that, they calculate that taxing corporate dividends as normal income would raise an additional $231 billion over ten years.
Check out his website! He has some very good ideas.
http://feelthebern.org
