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It’s been a big week for calling out corporate tax dodgers.
In his State of the Union speech, President Obama called for an economy where “everyone plays by the same set of rules” and where companies can’t avoid taxes by shifting profits overseas. He acknowledged what we’ve been saying for a long time which is that special interests have long played by a different set of rules than the rest of us – ones they’ve helped create, I might add.
That same night, Massachusetts Senate candidate Elizabeth Warren went on the Daily Show and called out 30 corporations that a recent Florida Public Interest Research Group (U.S. PIRG) and Citizens for Tax Justice study found paid more to lobby Congress than they did in federal income taxes between 2008 and 2010. When Warren told this to John Stewart on the Daily Show, it made the usually unflappable comedian’s jaw drop.
The special treatment that special interests have won over the years is on full display when it comes to our tax code. While small businesses and ordinary taxpayers pay taxes on the income they earn, companies like GE and Wells Fargo have so deftly manipulated the tax code that they paid no taxes on billions of dollars in profits between 2008 and 2010. In fact, they actually got tax rebates from Uncle Sam on tax day. While it may sound criminal, it’s all perfectly legal.
Most taxpayers can’t employ hoards of tax lawyers to manipulate the tax system or hire an army of lobbyists to craft the tax code in their favor. Warren put it best during her Daily Show interview: “Washington now works for those who can hire an army of lobbyists and an army of lawyers.” The “Dirty Thirty” companies identified by Florida PIRG and CTJ all told spent nearly half a billion dollars lobbying Congress on tax policy and other issues over the three year period of the study. “They hire those people to make [the tax code] onerous so they can worm their way through,” as Stewart rightly asserted.
Some of the most egregious tax loopholes allow large corporations to stash profits in offshore tax havens to avoid paying federal taxes. Many of the offshore subsidiaries are nothing more than PO boxes. In fact, a single five-story building in the Cayman Islands houses over 18,000 corporations under one roof. At least 22 of the companies among the Dirty Thirty have subsidiaries in offshore tax havens like the Caymans. Tax havens cost America $100 billion a year in lost revenue and it's ordinary taxpayers that end up footing the bill in the form of higher taxes, fewer services, or more debt.
The short term solution is simple: close the loopholes. But to stop corporations from just finding new loopholes, we need to turn back the tidal wave of corporate money that is swamping our elections. As a result of the Supreme Court’s ill-fated decision in the Citizens United case, companies can fill the campaign coffers of electoral candidates directly from their treasuries. For this reason, the lobbying done by these tax dodging corporations should be seen as a cautionary tale. It’s only the tip of the iceberg unless we can reverse the tide of corporate money.
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Some of the nation’s best-known companies — including GE, Google and Goldman Sachs — have avoided paying the taxes they owe, costing us $100 billion last year.
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