According to new research, the world’s super-rich are taking advantage of offshore tax havens to the tune of between $21 to $32 trillion dollars. Yes, trillion. To put that in perspective, that’s more money hidden abroad than in the entire American economy.
This is a double whammy to economic growth and recovery. Not only does this significantly lower tax bases of “source” countries — money that is supposed to pay for education, roads, water supplies, electrical grids, airports, and other infrastructure — but it also moves capital away from its source country into foreign tax havens, including places like the Cayman Islands and Switzerland (where Mitt Romney has stashed money). That capital is then not available in the source country to start or invest in businesses.
A similar problem is happening with corporate taxes. In July, a senior executive of Corning Inc. testified to the House Ways and Means Committee that America’s high corporate tax rate putting Corning at a disadvantage. She testified that Corning had an effective US tax rate of 36% in 2011, compared to an effective tax rate in foreign countries of 17%. Sounds terrible, doesn’t it!
There’s just one problem — it is a big lie. Between 2008 and 2011, Corning didn’t pay any US income taxes at all (even though they earned $3 billion during that time). In fact, they received $4 million dollars from the US government. Their effective US tax rate was actually negative 0.2 percent (compared to an 8.6% effective tax rate in foreign countries).
How did they do this? By offshoring their profits so they don’t have to pay US taxes on them. They supposedly would have to pay US taxes if they brought any of those profits back into the US, except that (as we’ve previously reported) the US already gave the corporations a tax holiday in 2004 that allowed them to repatriate their profits without paying any taxes, and will probably do it again.
That, my friends, is corporate welfare.
Interestingly, Mitt Romney thinks this is a good idea. At a campaign fundraiser a few weeks ago, Romney said:
Big business is doing fine in many places. They get the loans they need, they can deal with all the regulation. They know how to find ways to get through the tax code, save money by putting various things in the places where there are low tax havens around the world for their businesses.
I guess that we shouldn’t be surprised that Romney thinks avoiding taxes is good. Even if you don’t pay any US taxes at all.
10 Comments
Taking a brief break from training for my 4th adventure.
I agree with everything above, the tax code needs restructuring to discourage outsourcing of capital. I doubt however that either party will take on that challenge. Have you looked at the Presidents picks for his “jobs council”? It’s loaded with people who outsource jobs, materials and wealth.
http://www.washingtonguardian.com/outsource-outrage
How is he supposed to fix the problem surrounded by people who are the problem? There is just too much campaign money available to both candidates from these sources to actually make any meaningful changes.
What we really need to do is fix the real problem and that is campaign finance. Really, I’d vote for anybody that’s not beholding to big business, big union money and who will make fair decisions for the benefit of all. I just don’t see either candidate as that guy.
Still undecided
Psgt: I completely agree with your points about fixing the problem and campaign finance – I have been coming to the conclusion that campaign finance may be one of the largest root cause issues.
As far as the people on the jobs council, however, you might be leaping to a conclusion. You may b RIGHT, but it’s not a logical inference. If you were going to staff an advisory council on a problem, it is logical you would pick people that initmately UNDERSTAND the problem – which means people of similar experience to the ones you want to handle. “Set a thief to catch a thief”. That doesn’t mean that is what has actually happened, but it is possible.
As for your undecided choice, on these two issues I think the choice is unmistakably clear. Barack Obama MAY not do MUCH about fixing these problems – Mitt Romney WILL not do ANYTHING to fix them and has stated he will make them WORSE. Also note that Obama receieves more than 80% of his donations in small dollars from middle class individuals, Romney recieves 90% of his donaitons in big dollars from billionaires and corporations.
Not to mention that any candidate that has his campaign say, “We won’t let fact checkers dictate to us” deserves to be soundly thrashed.
Psgt, when you say the biggest issue to you is campaign finance and then say you’re still undecided it’s like saying you have a problem with water so you’re undecided on your vote between a lake or an ocean.
I still think all this money pouring into the campaign is a stimulus for the economy. What is the fallacy in my thinking?
Campaign spending is indeed one of the fastest growing areas of the economy 🙂 I would rather the money be spent elsehwere, however.
I’m not usually a conspiracy theorist, but I find it interesting that the status quo of campaign finance as defined by McCain-Feingold was fine as long as the money was about even, but when this upstart Obama showed an ability to vastly out-raise McCain, mostly with small donors, the result was unacceptable and had to be changed. Basically by being able to motivate a large number of small donors, Obama shifted the real power away from those with the financial resources that usually controlled elections. Changes had to be made that put the power back in the hands of those with the huge resources. The fact that this is what happened makes me very pessimistic that there is any way this will change in my lifetime.
Good to see you back out there PatriotSGT, haven’t seen anything from you in a while.
Obama has stated that he will support an amendment overturning Citizens United. http://www.huffingtonpost.com/2012/08/29/barack-obama-citizens-united-reddit_n_1841258.html While Romney thinks Citizens United is the best thing that ever happened. http://www.youtube.com/watch?v=0Cy_CEpZqHU
On that basis alone, I would think your decision is pretty clear, PSgt. Now, Obama is not dictator of the US, so just because he supports something doesn’t mean that Congress can pass it. But at least he is on the right side of the issue.
I would like questions such as “do you support overturning Citizens United” asked during the debates, along with many others so that we can hear what and more importantly how each candidate responds. (I can’t access you tube from where I am). I get what Romney was at Bain and that was his job, I also get was Obama was before during his school and younger life days. I believe both men can “evolve” and can change. I also believe both men truly love our country and I think Obama is exactly right that it’s a choice on how to solve our problems. Romneys record suggest he is more akin to compromising then even Obama on the surface. I liked Obama’s speech last night, I also found Romneys speech acceptable. Neither talked to any extent about how they’d fulfill all those great promises, so I guess it will come out in the debates.
As a conservative democrat I don’t like the balloning debt and I don’t like that 5-6 trillion of it was borrowed from Social Security and federal pensions. At some point our interest payments on that debt will overwhlem the budget. I don’t necessarily like shutting down government to reduce the debt, their are many needed programs, but I also don’t like ignoring it. Big tough decisions need to be made, all need to sacrifice, the poor need to continue to be protected and the country defended. Their are stalemates on both sides, the republican congress on 1 and the democratic senate on the other. Neither has stepped up in a leadership role. I think the Reps don’t want to fix anything so Obama gets fired, the Dems in the senate don’t want to fix anything so the Reps in congress get fired and the President campaigns.
Much to my surprise I am leaning toward Obama after the 2 conventions, but far from sold. I’m looking forward to the debates and hope to be able to watch a few or at least read about them.
Arthanyel wrote:
“Not to mention that any candidate that has his campaign say, “We won’t let fact checkers dictate to us” deserves to be soundly thrashed.”
Amen brother, I say Amen. The mitigated gall of Romney or Ryan’s statement should have sounded the alarm bells off around the country, but not unlike an abused spouse America routinely accepts the promise to be better in the future. It’s time for an intervention.
PatriotSGT, well said. I think both sides (at least in Congress) are seriously lacking in courage of leadership to make hard decisions. As far as the presidency goes, I just can’t get behind Romney/Ryan in any way. Romney completely lacks integrity and can’t be trusted to grow the middle class when he says he isn’t worried about the very poor because safety nets exist. I wonder how he plans to grow the middle class without either bankrupting some millionaires (doubtful) or boosting people with no or low incomes. Ryan on board is just a few more strikes against him with his wildly undetailed budget proposals and incredibly dishonest speech at the RNC.
Not that I could sway you or anything…