This sort of scheme also pushes jobs and manufacturing out of the country. If you manufacture out of the country and buy the product from a foreign subsidiary the same deferral applies. So companies are "encouraged" -- some would say forced -- to follow these schemes. If one company is boosting its numbers with these schemes, this pretty much forces other companies to follow or fall behind, and maybe eventually fall dead.
Where Is The Money Really?
So where is the money that is being "kept out of the country?" Well, largely in the country but kept away from shareholders. The NY Times explained Monday, in Apple's Web of Tax Shelters Saved It Billions, Panel Finds...
"Atop Apple's offshore network is a subsidiary named Apple Operations International, which is incorporated in Ireland -- where Apple had negotiated a special corporate tax rate of 2 percent or less in recent years -- but keeps its bank accounts and records in the United States and holds board meetings in California."
So the money is in US bank accounts (and investments), the corporate records are here, the board meetings are here, but it is an Irish corporation. Right.
Again, not just Apple. Yesterday, For U.S. Companies, Money "Offshore" Means Manhattan...
"During the last several years, major companies like Microsoft, Hewlett-Packard, Google and Abbott Labs have lowered their tax bills by arranging for their billions in profits to flow to subsidiaries that are technically offshore -- even though some of the money is placed in United States Treasury bonds and other government securities."
When some companies can gain advantages from schemes like this other companies have to do the same or face extinction. It doesn't matter if they hurt the country -- the executives in these companies really have little choice but to "follow the law" if they want to stay in business. It is up to We the People to make the congress change these laws.
They Follow The Law But They Write The Law
It's one thing when companies just "follow the law." It is another thing entirely when they pay lobbyists and put big money into secret campaign funds and the rest of what they do to write these laws and keep these laws the way they are, hurting the country and us. And now these companies are actually arguing for a special tax break on this money they are holding "outside the country," called a "tax repatriation holiday." They want a break letting them pay much lower taxes than they already owe to reward then for keeping the money out of the country away from their own shareholders! On top of that they want something called a "Territorial Tax" that lets them do this from now on with no taxes at all!
I mean, you can't blame them for trying, but, seriously?
What does it mean to be an American corporation? These giant American companies got where they are because they had the advantages of American-educated employees who got to work on American taxpayer-built roads, using American-funded basic R&D and American-funded courts and an American-backed financial system (remember the bailouts) backed up by a very expensive American military, etc., on their way up.
Now that they are successful it's time for them to pay back to America for making them the giant, wealthy companies they are. But now they say, as one Apple executive famously said, they "don't have an obligation to solve America's problems."
Wealthy corporate executives argue that these giant companies have no obligation except to make profits. But ask yourself this: "In a democracy why would We the People pass laws that set up entities that don't benefit US?" It is time for We the People to remember that we are the boss of them, not the other way around, and make them pay their taxes.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
2
1
1
