Author’s note: This article was originally published on the Madison Independent Examiner. There is a slideshow and video for viewing there. You may recognize some of the images from this site. The video is very informative and I encourage you to check it out. It is about time Americans demand that mega-corporations and the super-rich pay their fair share of the tax burden.
It has been widely reported since at least 2010 that U.S. corporations and the wealthiest Americans have taken advantage of tax loopholes by hiding their assets in offshore subsidiaries (a.k.a. tax havens) in order to avoid paying U.S. income taxes. The amount of money hidden in these tax havens and what the lost revenue means to the American people has not been so widely reported.
According to several sources, including the BBC, the non-partisan Congressional Research Service (CRS) and James Henry, former Chief Economist at McKinsey & Company, the top 1% of wealthiest Americans and corporations have deposited between $21 and $32 trillion in tax havens in order to evade U.S. taxes. The top seven U.S. banks, furthermore, account for over $10 trillion in assets in more than 10,000 overseas subsidiaries.
Assuming these figures are correct, if all of these assets were taxable, then the U.S. could collect billions, perhaps trillions in additional revenue each year.
Data from the Bank of International Settlements (BIS), the International Monetary Fund (IMF), the World Bank, and several governments are used in that assessment. (See video at source). CRS’s report focuses on five small countries generally considered to be tax havens (the Netherlands, Luxembourg, Ireland, Bermuda and Switzerland) and compares them to five of the top “traditional” foreign countries where American companies actually do business (Canada, Germany, the United Kingdom, Australia and Mexico).
While any knowledgeable person knows that U.S. multinational corporations engage in tax avoidance by shifting their profits into tax havens, not many know exactly how that is done. The waters are further muddied by CEOs and corporate lobbyists who either deny that outright or use the standard industry mantra: “Our company pays all applicable taxes in every jurisdiction where we operate.”
The practice of using tax havens is somewhat simple and is legal under current tax codes, but that does not make the practice morally right or even ethical. Corporations and banks simply need to shift their profits by conducting transactions in countries with little or no corporate taxes. U.S. tax codes allow a “deferral” on paying taxes in the U.S. until the funds are actually brought back to the U.S. and in most cases, they never are.
A classic example of tax haven abuse is the common practice of registering subsidiaries in the Cayman Islands. With more than 85,000 companies registered there, it is one of the few territories in the world that has more organizations than inhabitants.
Mitt Romney’s Caymen Island accounts garnered some scrutiny during last year’s Presidential election. Facebook sheltered $700 million in the Cayman Islands in 2012, while posting over $1 billion in profits and paying no taxes in the US. In fact, 26 of the 30 largest U.S. corporations that utilize subsidiaries paid no income tax between 2008 and 2011, including GE, Boeing, Verizon, Bank of America and Goldman Sachs. The banks on the list, ironically, were bailed out by U.S. taxpayer money.
It can be correctly argued that the U.S. has the highest corporate tax rate in the world at 39.2% when both federal, state and local taxes are included. That, however, means very little in terms of actual taxes paid when corporations and the top 1% hide most of their profits and assets in offshore tax havens. Smaller corporations, small businesses and the bottom 99% of individuals are generating more than their fair share of revenue than are large corporations and the top 1%.
Conservative estimates of lost federal revenue due to offshore tax havens are about $150 billion per year, but that does not take into account what the states lose. A U.S. Public Interest Research Group (PIRG) report estimated that states lost nearly $39.8 billion in revenues in 2011, bringing the total to about $190 billion annually. Of that total, corporations were responsible for about 65% in lost revenues to tax havens, while wealthy individuals were responsible for the rest.
To put that in perspective, $39.8 billion would cover education costs for more than 3.7 million children for one year. This sum is also roughly equivalent to total state and local expenditures on firefighters ($39.7 billion) or on parks and recreation ($40.6 billion) in 2008. The U.S. national debt is closing in on $17 trillion and the sequester cuts total about $22 billion. $150 billion in additional federal revenue would make sequester a moot point and remove austerity from the national political vocabulary. The government could then move on to addressing the real problem in the economy – lack of well-paying jobs.
In his book, The End of Poverty, Jeffrey Sachs estimated that in order to end extreme world poverty it would cost $175 billion per year for the next 20 years, a total of $3.5 trillion. In other words, the wealthiest corporations and individuals have enough in offshore tax havens that they could do that now and still retain most of their assets. Taxing 65% of between $21 and $32 trillion in profits and assets at a rate of 39.2% could also provide more than enough to do that.
Dropping food instead of bombs on impoverished nations, true humanitarian projects such as helping to provide clean drinking water and electricity, instead of facilitating regime change in third world countries, may help to repair the U.S. image in the world and reduce terrorism. A better world image may even reduce the need to spend more on defense than the next 13 nations combined. As things stand now, unfortunately, the U.S. does not have enough revenue to help its own people.
The same businesses that avoid paying taxes are also the ones that benefit from educated American workers, an infrastructure that aids in the transportation of goods, services and transactions, and the security that the publicly-funded police and military provide on both a local and global level.
Yet corporations, banks and wealthy individuals have no problem with avoiding paying their fair share of taxes, thereby dumping the tax burden on the working poor, middle class and small businesses. Meanwhile Americans are looking at cuts in social services such as Medicare and Social Security, a crumbling infrastructure, an underfunded educational system, a higher deficit and higher taxes.
It is about time for Americans to demand that lawmakers put the brakes on the free ride that huge corporations and the top 1% have been getting for the past few decades.
Get links, sources, a slideshow and video here: Madison Independent Examiner – Closing corporate tax havens: The solution to the sequester (and world poverty)
“Free lunch, total wisdom, and full coverage . . .”
The face on an Oakland threshold
After receiving a tip that some Phd’s are staying in a local shelter, and rejecting the possibility that it’s unlikely that a Republican majority United States Supreme Court (SCOTUS) would issue a game changer liberal ruling, and wondering if some third party countries might be goading North Korea into a hostile action against the USA, why would a teetotaling columnist think that a new gin mill for journalists in the Oakland area would make the best topic for a new column? The oil spill in Mayflower Arkansas isn’t getting any media mentions so scratch that off the possible topics list. Updates on the nuclear plants in the Fukushima area of Japan won’t interest anybody but the treehuggers. Kim Jong Un seems to have spoiled the news value of sequester cuts because there seems to be plenty of money available for Obama to do some “saber rattling” type diplomacy.
In a media market that has been inundated with analysis of the Gay Marriage issue, the fact that we have not encountered any commentary that points out that it is very unrealistic to expect a ruling from a conservative majority SCOTUS that would hand the liberals a “walk off grand slam” ruling and since there has been a surfeit of punditry that tries to keep a “think it through, Agent Utah,” outcome shrouded in a veneer of “anybody’s guess” mystery, writing a column with a tone of predestined inevitability seems like a waste of time and effort.
What good would it do to point out that some nefarious country with an Eddie Haskel type sense of humor might think it would be amusing to goad the leader of North Korea into renewing hostilities on the Korean peninsula because that would make it more difficult for the USA to resort to some of the “all options are on the table” solutions to the task of preventing Iran from manufacturing WMD’s? Didn’t the USA show that they could successfully handle the challenge of a two ocean war back when FDR was President?
The possibility of doing an article about finding people with Phd’s in shelters located in close proximity to a world famous University might have some potential for landing a long and arduous assignment from the editor of the New Yorker magazine but doing all that work just to get a column for the Internets that would be just three e-takes long, seems a bit too Pollyanna-ish for the World’s Laziest Journalist. Didn’t we already mention the New York Times writer who now lives in People’s Park?
The Don Quixote challenge of starting a new establishment that will gain a place on the list of the mythological watering holes for word slingers – now that’s worth writing about.
To write about that topic, wouldn’t the abstaining columnist have to have some first hand knowledge of places such as Hurley’s bar in the Rockefeller Center area of New York City where Frank McGee would huddle with his co-workers while members of the staff of the AP’s New York Bureau gathered at a separate table nearby? Check.
Wasn’t The Keg near the Santa Monica Evening Outlook a legendary drinking place?
Wasn’t the hotel in liberated Paris, called the Scribe, the setting for some amazing feats of alcoholic consumption?
Didn’t the war correspondents in Saigon gather at the Hotel Continental each evening to watch the artillery shelling of the city’s outskirts? Were journalists permitted entry into the Purple Porpoise bar in Vientiane Laos, if that city actually existed?
We noticed in the New York Times Arts & Leisure Section for Sunday March 31, 2013, an article about a new Broadway play titled “Lucky Guy,” which is based on the life of Mike McAlary who was a columnist with “high-octane swagger” who (reportedly) did cartwheels when “closing time” was announced at the bar where he happened to be imbibing.
Gonzo Journalism is starting the second half of its first century according to the way one of the founding fathers, Tom Wolfe, sees it, so the summer of 2013 might well be a time when America is awash in nostalgia for Gonzo journalism and that means that the idea of starting a new place in Oakland that will be gathering place for writers who grew up believing that they had to “go where the action is” has merit. Do folks outside the Oakland area know that Lake Merit isn’t a lake?
The Tribune Tavern, which will be located on the ground floor of the Tribune building in downtown Oakland, has opening day scheduled for April 10th. Wouldn’t the journalists who covered Saigon have preferred a bistro on the top floor?
There is one tavern in Oakland where police tend to gather and talk shop talk. Journalists tend to “let their hair down” when they are among their own kind. Motorcycle enthusiasts tend to go to biker bars. So gin mills may be an example of the old folk wisdom “water seeks its own level.”
While traveling in Australia a few years back, we noticed that the smoking and drinking table found at most of the hostels where we stayed tended to attract the most loquacious of the travelers staying there and so we often found the best conversations at those gathering places even though we do not smoke or drink liquor. Perhaps a non drinker can hold his own in this new watering hole where columnists should be welcome.
Speaking of the legendary San Francisco columnist Herb Caen and the fact that National Columnists’ Day is rapidly approaching, a recent Chronicle front page story detailing the attempt to assemble a list of San Francisco bars that are culturally significant makes all of Caen’s Bay Area fans a bit sad that he isn’t alive and fighting to augment that effort with a campaign to establish a “Gin Mill Hall of Fame” for the legendary bars that are gone but not forgotten.
What kind of chatter makes a journalists bar interesting? About forty years ago, in a bar in a state known for gambling, a crusty old reporter told about the time he was a rookie who went with the old hands to a bar for a bit of liquid refreshment. The journalist with a “white belt” level of experience got into a lively discussion with a veteran sports reporter about the legendary race horse “Man o’ War.” The two had differing ways of speculating about the Triple Crown winner that couldn’t be settled until the bar tender jumped into the conversation and very emphatically said what the horse would have done under the hypothetical circumstances. When the bar tender was asked “What makes you so certain?,” he replied “Because I was his trainer.” That, in turn, led the young tenderfoot journalist to a high profile series of freelance articles about horse racing.
Realistically, when the Tribune Tavern opens, we don’t expect to find anything that we can use in a query letter to the assignment editor at Scanlon’s Magazine, but maybe we will stumble upon a source who can tell us if the “scientists” at the Amalgamated Conspiracy Theory Factory (ACTF) have made any progress on their investigation into the possibility that “they” can use a dormant wifi connection to hack into laptops that are turned off and look at your private photos and read your e-mails.
Speaking of the Amalgamated Conspiracy Theory Factory, we heard a recent radio news story that informed listeners that a recent Pew Research Center effort produced data that indicates that some classic conspiracy theories are gaining new adherents.
If journalists gather at the new Oakland location, maybe we can track down some facts to confirm or deny the rumor we have heard that preliminary work is being done in the Amalgamated Conspiracy Theory Factory’s Planning Department to build a wing to house a Conspiracy Theory Hall of Fame museum.
Sometimes when journalists talk among themselves they come up with new story ideas via the “catalyst” phenomenon.
Will the most cynical journalists look at the cheating teachers scandal in Georgia and start to wonder if doctors get commission checks (or free junkets to the Bahamas?) from pharmaceutical companies when they exceed a certain number for prescriptions of a particular medicine.
Most journalists who have spent any time observing humanity in a bar know that President Obama, in his war of words with Kim Jong Un, is rapidly approaching a tough decision that cause bar room brawlers to realize for both leaders it’s time to either throw a punch or shut up.
Hunter S. Thompson’s philosophy for journalists was “Free lunch, final wisdom, total coverage . . .” and that brings to mind the old question: “How can you tell if someone is a journalist?” The answer: “He is the guy who goes up to the free food, starts shoveling it into his face and, with a mouth full of food, asks: ‘Where is the Hand Out?’” Hand Outs are prewritten news stories that save lazy journalists (moi?) a lot of time and work.
Journalists can only take so much of official BS. How many toasts will be inspired by a society that continues to foreclose large numbers of homes while the local radio urges the listeners to save more money? As an old coworker used to say: “My car payments are driving me to drink.”
[Note from the Photo Editor: We used a photo of a bit of artistic decoration from Oakland but not from the one that hasn’t opened yet, because we thought that the quaint example, of a nearby establishment’s threshold, of art for bars would help set the tone for this column and it gives us a chance to make a literary allusion to the “face on the barroom floor.”]
In issue 111 of Granta magazine, on page 210, Richard Russo wrote: “After World War II, about the same time men stopped wearing hats, women stopped wearing gloves.”
Now the disk jockey will play Slayer’s “World Painted Blood,” the Celtic Cowboys “Kiss My Irish Ass,” and a ditty titled “The Alco-hall of Fame.” We have to put on our Gonzo disguise and go incognito to cover this new place in Oakland. Have a “there’s no ‘there’ there” type of week.