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Big American firms play dirty shell games
By Paul Egerman |
September 15, 2011, Thursday
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I love America, and have proudly invested in America. I have invested by building successful businesses employing thousands of American workers. And I have invested in our country by paying taxes.
But our nation loses US$100 billion a year to tax dodging by some of our largest corporations and wealthiest people. That's a trillion dollar hole in our national treasury over the next decade unless we act now to plug it.
Tax dodging companies are disinvesting in our country - not investing in it.
Many US multinational companies use a gimmick called "transfer pricing" - shifting patents to their offshore subsidiaries, for example - in order to pretend they've earned their profits in a tax haven like the Cayman Islands, Bermuda or Luxembourg, even though their operations there may be little more than a mail box.
What they're really doing is transferring their US profits offshore and transferring their tax responsibilities to the rest of us.
In this global version of a shell game, corporations move their profits to offshore shell company subsidiaries; the US parent company reports to the IRS that they've made almost no profits, or even lost money on their US operations. These companies are passing the buck to other taxpayers and robbing our national treasury of funds we need.
It sickens me that businesses like mine responsibly paid taxes at the rate of 35 percent on millions of dollars in profits while companies like General Electric would pay zero percent on billions of dollars in profits.
I have been fortunate to live the American Dream. I know my success is due to many factors. I know, for example, as a software entrepreneur, that I would have had no business at all without the government assistance I received for my college education, or the government research that led to the Internet.
Tax dodging
It's obscene that computer and internet companies like Google, Microsoft, Apple and Cisco are part of a coalition clamoring for a tax holiday to "repatriate" profits they shifted to tax havens to avoid US taxes.
It's obscene that so many members of Congress are willing to legislate austerity for American workers, small businesses and retirees while leaving the door open for big corporations to dodge taxes through tax havens.
We all benefit from public services, infrastructure and research paid for by tax dollars. Instead of reducing our debt by cutting vital services, we need to close two big tax deficits - the tax haven deficit and the deficit from the Bush tax cuts for the affluent. Each is worth a trillion dollars over the next decade.
The Stop Tax Havens Abuse Act introduced recently in Congress by Democratic Senator Carl Levin of Minnisota and Democratic Representative Lloyd Doggett of Texas would close the loopholes that reward those who disinvest in America and dodge taxes to unfairly boost their corporate treasuries. It should be a no-brainer solution in deficit reduction.
It is simply outrageous that we would ask unemployed and disabled Americans and Medicare and Social Security recipients to sacrifice more while continuing to shower tax savings on millionaires and billionaires who have a larger share of the nation's income than any time since the 1920s.
It's time for Congress to plug the loopholes that allow our largest corporations to avoid billions of dollars in taxes.
After all, American corporations and wealthy individuals should be proud to support our country and invest in its future.
Paul Egerman is co-founder of the medical information technology company eScription. Copyright: American Forum. Shanghai Daily condensed the article.
But our nation loses US$100 billion a year to tax dodging by some of our largest corporations and wealthiest people. That's a trillion dollar hole in our national treasury over the next decade unless we act now to plug it.
Tax dodging companies are disinvesting in our country - not investing in it.
Many US multinational companies use a gimmick called "transfer pricing" - shifting patents to their offshore subsidiaries, for example - in order to pretend they've earned their profits in a tax haven like the Cayman Islands, Bermuda or Luxembourg, even though their operations there may be little more than a mail box.
What they're really doing is transferring their US profits offshore and transferring their tax responsibilities to the rest of us.
In this global version of a shell game, corporations move their profits to offshore shell company subsidiaries; the US parent company reports to the IRS that they've made almost no profits, or even lost money on their US operations. These companies are passing the buck to other taxpayers and robbing our national treasury of funds we need.
It sickens me that businesses like mine responsibly paid taxes at the rate of 35 percent on millions of dollars in profits while companies like General Electric would pay zero percent on billions of dollars in profits.
I have been fortunate to live the American Dream. I know my success is due to many factors. I know, for example, as a software entrepreneur, that I would have had no business at all without the government assistance I received for my college education, or the government research that led to the Internet.
Tax dodging
It's obscene that computer and internet companies like Google, Microsoft, Apple and Cisco are part of a coalition clamoring for a tax holiday to "repatriate" profits they shifted to tax havens to avoid US taxes.
It's obscene that so many members of Congress are willing to legislate austerity for American workers, small businesses and retirees while leaving the door open for big corporations to dodge taxes through tax havens.
We all benefit from public services, infrastructure and research paid for by tax dollars. Instead of reducing our debt by cutting vital services, we need to close two big tax deficits - the tax haven deficit and the deficit from the Bush tax cuts for the affluent. Each is worth a trillion dollars over the next decade.
The Stop Tax Havens Abuse Act introduced recently in Congress by Democratic Senator Carl Levin of Minnisota and Democratic Representative Lloyd Doggett of Texas would close the loopholes that reward those who disinvest in America and dodge taxes to unfairly boost their corporate treasuries. It should be a no-brainer solution in deficit reduction.
It is simply outrageous that we would ask unemployed and disabled Americans and Medicare and Social Security recipients to sacrifice more while continuing to shower tax savings on millionaires and billionaires who have a larger share of the nation's income than any time since the 1920s.
It's time for Congress to plug the loopholes that allow our largest corporations to avoid billions of dollars in taxes.
After all, American corporations and wealthy individuals should be proud to support our country and invest in its future.
Paul Egerman is co-founder of the medical information technology company eScription. Copyright: American Forum. Shanghai Daily condensed the article.
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