Corporate Tax Havens
|July 6, 2002||Posted by Staff under Progress Report, The Progress Report|
Here is a news update from Taxpayers for Common Sense. TCS is the best organization that monitors excessive government spending, corruption and corporate welfare.
CORPORATE TAX HAVENS
Progress Report Readers please note — for the first time in years, we find ourselves in sharp disagreement with our friends at Taxpayers for Common Sense. Here is their latest news bulletin, along with our own comments inserted (in italics).
Each year, an increasing number of profitable American businesses decide to transfer their corporate headquarters to tax-haven island paradises. It’s hardly noticeable when companies “relocate” because it rarely involves a packed box or personnel transfer, and all U.S.-based operations remain the same. The moves are only a blatant effort to fatten thick corporate wallets by not paying U.S. taxes.
Tax avoidance is a natural behavior. If taxes were levied as they should be, on things such as pollution, land speculation, and special privilege, then we would all benefit when corporations strive to cut their tax liabilities.
After turning their back on this great country, these bad corporate apples continue to benefit from the infrastructure, technology, education, protection from terrorists and other services that are paid for with federal tax dollars. This pathetic behavior effectively shifts the tax burden to police officers, small business owners and other hard working Americans across the country that are unable to join the exodus overseas. No individual taxpayers have the option of claiming residency in a Caribbean island and not paying taxes while simultaneously keeping their rights of citizenship.
Income taxes can be escaped, but not a site value tax. If a corporation enjoys a special privilege, then tax that privilege based on its full market value. That would be much fairer than an income tax.
Benefits for relocation have been substantial. Tyco International, a manufacturing company, saved $400 million and Ingersoll-Rand saved $40 million last year by moving to the sunny islands. Enron had 800 faux-businesses set up in offshore havens to avoid millions in taxes. In this time of growing federal debt and spending, while the nation spends tens of billions of dollars to protect us from terrorism, these corporate deadbeat dads are shirking their responsibilities.
The corporate income tax must distort economic decisionmaking quite a lot if it causes corporations to move their headquarters. We agree that is a shame. Don’t use taxes that distort the economy, use nondistortionary taxes instead. Stop penalizing income, everybody likes income. Instead, levy taxes on pollution, land speculation, and special privileges.
The biggest problem is that everything these modern day robber barons are doing is legal. The Arthur Andersens of the world have exploited loopholes in our tax code to find new, legal ways for corporations to cut their tax bills by moving overseas. According to the IRS, these corporate crooks steal $70 billion annually from the federal treasury by not paying their fair share in taxes. Proud patriotic Americans understand the responsibilities they owe to this country, they don’t try to avoid them.
No one wants to pay more tax than they owe. And no one should! There’s nothing patriotic about being stupid.
While many corporations would have us believe that the cost of taxes is ridiculously high, U.S. corporate tax rates as part of the G.D.P are actually one of the lowest in the world. The real ridiculous part is that millions of individual Americans are paying more taxes each year than some of the wealthiest corporations in the country. By running away from their responsibilities, the companies that don’t pay their way are destroying the U.S. tax system and telling us that fairness is not key to sustaining the U.S. tax code.
“Destroying the U.S. tax system” sounds like a good idea if it means getting rid of the stupid income tax, the payroll tax, the Jim Crow sales tax, and the property tax on houses and other improvements. Taxes such as those are penalties against labor, against thrift, against commerce and against housing. Those are, in other words, anti-American. We need a tax code based on fairness. Ever heard the slogan “pay for what you take, not for what you make”? That is more in line with what America needs. We need taxes on pollution, monopolization, privilege, things that take from the freedoms of others — not taxes on productive activity and human initiative.
As story after story of corporate malfeasance hits the news media, there is a growing chorus of lawmakers supporting efforts for reform. The campaign in Washington to bring these tax scofflaws to justice is being led by Reps. Richard Neal (D-MA), and Lloyd Doggett (D-TX), both of whom are influential members of the House Ways and Means committee. These lawmakers believe that paying taxes is patriotic and that making these companies pay their fair share is the right thing to do. They are proposing legislation that will ensure that companies still pay U.S. income tax after they incorporate overseas but maintain the same assets and shareholders.
Paying fair taxes is patriotic. Paying stupid distortionary taxes is merely prolonging an unfair system. The income tax has no relation to what someone’s “fair share” is. Your “fair share” of taxes is the economic value of any privileges you receive and any costs you impose on others. Levy taxes based on that, and you’ll see corporations acting swiftly to cut their consumption of natural resources, cur their lobbying, cut their pollution, etc.
American corporations also have much to benefit from these efforts. Recently, the head of Goldman Sachs said that he knew of no other time in our nation’s history where business overall has been held in less repute and that key to getting the economy back on track is to restore this integrity.
Preventing corporations from cheating the federal treasury out of billions of dollars while other hard working Americans pay their fair share should become a leading priority for this Congress. Let’s put an end to the corporate tax dodge.
But corporations aren’t cheating, as you yourselves acknowledge when you said their moves are entirely legal. The income tax leads lots of individuals to do weird things, too. Let’s put an end to distortionary taxes and bring fiscal fairness back to America.
For more information, contact Keith Ashdown at (202)-546-8500 ext. 110 or by email at email@example.com
TCS is at www.taxpayer.net
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