I get annoyed any time some pundit trots out the statistic that the corporate tax rate in the US is higher than most countries. The actual tax rate is not very meaningful when there are plenty of ways to shelter corporate income from taxes. Indeed, the US has one of the lowest effective tax rates in the world for corporations.
But just to add insult to injury, Matt Taibbi has another mind-blowing article about how corporations aren’t happy with just getting a free lunch on the taxpayer. Believe it or not, even though we are facing a huge deficit brought on in part by allowing corporations to avoid taxes by sheltering profits in other countries, Congress is thinking about giving these same corporations a tax holiday to allow them to move these profits back into the US (if the past is any indicator, so they can give even bigger bonuses to their executives). As Taibbi puts it:
For those who don’t know about it, tax repatriation is one of the all-time long cons and also one of the most supremely evil achievements of the Washington lobbying community, which has perhaps told more shameless lies about this one topic than about any other in modern history.
To make it worse, after companies were allowed to repatriate their profits without tax back in 2004, they started systematically moving their profits overseas even more aggressively in anticipation of being given another tax holiday in the future. They were planning on this, as if they had already arranged it with their bought-and-paid-for politicians.
Imagine the uproar if Congress passed a law that allowed immigrants to this country to shield their income from taxes, as long as they sent that income back to their home countries?
But here we are, with the Republicans simultaneously screaming about the deficit and planning on giving a tax holiday to the same corporations that are enjoying massive profits, excessive bonuses, while not keeping their promises to create jobs. And this tax holiday is to reward them for systematically avoiding taxes for the last seven years.
As Taibbi concludes “Have we all lost our minds?”
One Comment
Yes, the Republicans have lost their minds.
The offshore tax repatriation is another example of something that could make sense with restrictions, but makes NO sense the way that Republicans want to use it. If we allowed corporations to move money back to the US with a significantly lower (or no) tax bite IF they spent the money in hiring or pay raises for employees making below $200,000 per year, that would have a positive economic benefit. But just letting them off the hook so they can put more money in their pockets is just a bad mistake.