As the shell game operators, the corporations ensure that they never lose. In 2003, corporations attributed $150 billion of their foreign profits to tax haven jurisdictions, up from $88 billion in 1999. At the corporate tax rate of 35%, that's $52.5 billion that these corporations are evading in taxes.
Taxes are the price we pay for a civil society. Paying taxes is not some carny shell game. Corporations enjoy the benefits of our civil society but are evading their tax responsibilities. We need to develop policies and regulations which will ensure that those who benefit from our free society pay their fair share of taxes.
First, corporations need to keep one set of books for investors and the IRS. Currently, publicly-traded corporations file two sets: one for the SEC and investors, and one for the IRS. The former is an optimistic snapshot of a corporation's finances; the latter, filed with the IRS, paints a gloomy picture of a destitute corporation. One set of books, clearly stating the financial status of a corporation is a simple fix.
We must also ensure that tax havens don't hide ill-gotten gains, whether from drug smuggling, terrorism, human trafficking, or from individual and corporate tax evasion schemes. We should encourage tax haven compliance with transparency standards. These 70+ tax havens should allow our government to investigate illegal activity without the usual run-around that allow the criminals to move their money before any warrants are issued. (In many of these tax havens, it is against the law for bank officials to cooperate with criminal investigations.)
Finally, we need politicians with the will to go after these corporations and their enablers, their shell companies and shell games who skirt the law and evade paying their fair price for operating in our civil society.
1“Enron's Top Man,” PBS NewsHour, February 12, 2002. www.pbs.org/newshour/bb/business/jan-june02/lay_2-12a.html
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