by Chuck Collins
February 28, 2011
Originally published at OtherWords
We’re chumps unless we force Congress to stop tax haven abuse.
Instead of cutting state and federal budgets, the United States should crack down on the corporate tax dodgers thumbing their noses at us.
Across the nation, states are making deep cuts that will wreck the quality of life for everyone to close budget gaps that total more than $100 billion.
But there’s a more sensible option. Overseas tax havens enable companies to pretend their profits are earned in other countries like the Cayman Islands. Simply making that ruse illegal would bring home an estimated $100 billion a year.
The next time you read a story about some politician bemoaning that “there’s no money” and “we have to make cuts,” just point to artful tax dodgers in our midst.
They include some of the banks that trashed the economy but gladly took our tax dollars to stay alive after the economic meltdown. Bank of America. Wells Fargo. Citigroup.
Goldman Sachs took a $10 billion taxpayer bailout but then gamed its effective tax rate down to one percent through what its shakedown-artist executives call “changes in geographic earnings mix.” Shame on them. Pay up.
See that FedEx delivery van go by on the roads you paid for? Pay up FedEx! Don’t pretend you’re not making billions in the U.S. Don’t lie and tell us you made all those profits on some island with more palm trees than people. We know the demand for coconut delivery isn’t that big.
These corporations are heavy users of our taxpayer funded public infrastructure and property rights protection systems. They use our regulated marketplace, call upon our law enforcement system and judiciary to remedy disputes. They’re protected by U.S. police forces and firefighters. They enjoy all the privileges and benefits of tax-paying citizens. They just don’t pay their fair share for them.
So, ExxonMobil: the next time your gas station erupts in flames, why don’t you call the fire department on the Cayman Islands? Or when someone holds up the joint, how about calling the Luxembourg police, since that’s where you claim your profits so you don’t have to pay the taxes you owe Uncle Sam.
Hey, Pfizer. Without our remarkable taxpayer-funded system of patents and intellectual property rights protections, everyone and their brother would be making Viagra and undercutting your sales of little blue pills. Pay up!
Those of us who pay sales taxes and have income taxes withheld from our paychecks will bear the brunt of state and federal budget cuts in schools, public transportation, and recreational facilities. Our most vulnerable family members and neighbors will suffer thanks to cuts in mental health services, elder care, and Medicaid.
Oh yes, and children. Arizona is cutting health care for 47,000 children. California, New York and Mississippi are cutting K-12 education funding. Hey, kids don’t vote. Nor do they have corporate lobbyists. An estimated 900,000 jobs will be cut, including teachers, firefighters, police officers, and medical first responders.
Boeing, you want another contract for a taxpayer-funded military jet? Well, pay up! Pay up General Electric, Mattel, Dow Chemical, Hewlett-Packard, and Cisco. Yes, we know you pay some taxes. But look these children who are losing their health insurance and teaching aides in the eye. Tell them you’re paying your fair share.
These global corporations will complain that forcing them to pay their fair share of taxes will “kill jobs.” Let’s be clear: the patriotic businesses that currently pay their taxes and have to compete against these tax dodgers are the employers we want. It undercuts U.S. jobs for domestic banks, retailers, and manufacturers to have to compete against companies that can game the tax system.
The next time you’re waiting longer for a bus or train than you should, or someone you know can’t get timely mental health or drug treatment services, remember the tax dodgers. The next time your car hits a pothole or your kid’s teacher loses her job, remember the corporations that are using armies of accountants to lower their tax bills.
In a democracy, if we sit back and just grumble, we get what we deserve. We’re chumps until we wake up and force our members of Congress to stop tax haven abuse.
We are excited to launch a new initiative in partnership with Resource Generation, to mobilize young people with wealth to speak out for fair and equitable taxes.
The Progressive Tax Campaign Organizing Team is a one-year intensive action project for young people, 18-35, with wealth who are ready to launch a campaign for progressive tax reform. The 2011 group will engage in collective study on taxes, build storytelling, media and campaign skills, and work together to hone and launch a campaign.
We are now accepting applications – due March 14th. Learn more and apply here.
Contact us at contact us at taxcampaign@resourcegeneration.org with any questions.
Baltimore Sun, 2/14/11
by Gerald E. ScorseThe IRA charitable deduction is a siphoning away of public revenue to private charity.
Tax-deferred retirement accounts were created under a law passed by Congress in 1974. They strike a bargain between taxpayers and the Treasury: money in the accounts grows tax-free, but taxable withdrawals must be taken yearly after age 70 1/2. Both sides win. Roughly half of all Americans have gotten a jump on financial security, and now hold trillions in retirement savings. On its part, the Treasury gets an annual influx and is nearing demographic gold. The first baby boomers reach required distribution age in 2016, and a mother lode of retirement taxes should start streaming in. Congress, though, has proven more than willing to help the affluent slip away from the tax payback. Two examples are the late-December renewal of a 2006 Bush tax break, and a one-year suspension of minimum required distributions. The starkest instance—and the most costly for the Treasury—stemmed from the financial meltdown. With portfolios plummeting, Congress rushed to freeze mandatory withdrawals for 2009. Only the haves stood to gain. Anyone who actually needed the distribution had to take it and pay taxes; the haves took a pass and saved thousands. The stock market recovered and the suspension was allowed to lapse. Nobody should expect an encore, but the precedent has been set. The lame duck Congress passed, among other measures, an extension of the Bush tax cuts for the wealthiest two percent of Americans. Along with it, fitting right in, came a one-year renewal of the IRA charitable deduction. Holders of Individual Retirement Accounts (IRAs) can direct up to $100,000 of their annual required distribution to charities. No federal or state taxes are paid. Because the money doesn’t count toward income on tax returns, high-income filers could avert hikes in Medicare premiums. According to one estate attorney, the bill is “good for about 10 different reasons.” They’re all about avoiding taxes. What we have here is a siphoning away of public revenue to private charity. Money may go to good causes, but the transfer violates the payback half of the retirement bargain. In effect, the money is being stolen from the U.S. Treasury (and from every state that has an income tax). Donors have their hearts in the right place and the law behind them. Charities are thrilled. The thieves are in Congress, always ready to jigger the tax code on behalf of the well-off. While the IRA withdrawal formulas apply to everybody, they heavily favor those in no need and no hurry.
Withdrawal formulas also stiff the Treasury by putting a tight lid on annual increases. While the formulas apply to everybody, they heavily favor those in no need and no hurry. So-calledstretch IRAs, an estate planning tool, can string out distributions—get ready now—into the next century. So-called stretch IRAs, an estate planning tool, can string out distributions—get ready now—into the next century.
Brokerage houses distort the tax payback in their own way. They’re making billions on retirement accounts, but they continually bash required distributions. A Fidelity advisory, for example, told clients that at 70 1/2 they’re “required to start raiding” the accounts. Raiding? Not exactly. Minimum distributions mean it’s time to pay back Uncle Sam for decades of tax deferral. Even after federal and state taxes, affluent Americans over 70 1/2 are likely looking at annual payouts in the healthy five figures. Whatever the number, it got there with a long tax-free ride. How about a little gratitude? And instead of robbing Uncle Sam, let’s have sensible distribution rules from Congress. |