While cons rail about pittances unpaid by students, corps escape billions in taxes

Legion Troll

Legion Troll

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We're closing in on April 18, the extended tax deadline day, so reflection is in order, particularly relating to the force of "greed, politics and power" in our federal tax system and their consequences.

Some corporations are simply not good citizens.

Not only do they engage in aggressive tax-avoidance schemes — lobbying and infusing political campaigns with cash to curry favor — they work hard and spend big to create them, as well.

As a result, the costs of the nation's infrastructure, technology, research facilities, higher education, homeland security and defense fall to others — namely the rest of us — while the corporations continue to benefit from what they do not help to support.


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WHEN THEY DON'T PAY, YOU HAVE TO​
 
Corporations reduce their tax bills while they rant about the unfairness of the U.S. tax code and deprive the U.S. Treasury — that's us — of billions.

They create foreign shell corporations — Google has been in the spotlight recently for shifting revenues from its subsidiaries to a Bermuda shell company, Alphabet Inc. —to protect income from the reach of tax authorities in the United States and the United Kingdom, saving $2.4 billion in worldwide taxes last year.

And, they rely on a variety of carefully manipulated "legal" business write-offs and exemptions to reduce the income they earn stateside in order to avoid U.S. tax.

One offshore tax loophole, for example, has been stretched by corporate tax attorneys and accountants to create ways for companies to register intellectual property, such as patents or trademarks, in tax havens.

When a product is sold in America, part of the purchase price is sent to the tax haven to pay for use of the patent, and these funds escape U.S. taxes.

Microsoft reportedly sends 47 cents of every U.S. sales dollar to Puerto Rico to pay for patents on discoveries largely made in the United States.

Pfizer turned tax-avoiding paper transactions into an art form: It sells 40 percent of its drugs here but hasn't reported any U.S. profits in five years.

Merck also benefits from offshore tax loopholes. The loss to the U.S. Treasury? Some $90 billion a year.



http://www.nj.com/opinion/index.ssf/2016/04/how_njs_largest_corporations_legally_dodge_us_taxes_opinion.html
 
Inversions are particularly noxious ways to reduce taxes. These latest insults to the notion of a progressive tax system work this way: An American company merges with a foreign company and reincorporates in its merged company's country in order to benefit from that country's lower tax rate.

But, only the "tax headquarters" moves, not the folks at the top. They stay stateside, you know, reaping the benefits of living in the U.S.

While income earned in the U.S. is still subject to federal income tax, they can report having little to be taxed domestically through a variety of devices.

"Stripping" is the beast in this, allowing loans and deductible interest payments to offset earnings.

In fact, some big players even get tax credits through this scheme.

Inversions cost our nation some $20 billion. Stripping may drain even more dollars from the U.S. Treasury.

That's hardly surprising as, according to Forbes, companies racked up some $140 billion in inversion deals in 2015.


http://www.nj.com/opinion/index.ssf/2016/04/how_njs_largest_corporations_legally_dodge_us_taxes_opinion.html
 
Johnson Controls, with headquarters in Milwaukee, recently combined with Tyco International, which is based in West Windsor but "headquartered" in Ireland, after inverting itself to Bermuda, then Switzerland and then Cork, Ireland. The move saves Johnson some $150 million a year.

This is a company, by the way, that was saved by the $80 billion federal government auto bailout and that reaped big tax incentives — some $150 million between 1992 and 2009 — from Michigan, as well.

Congress is doing nothing to limit loopholes or to end inversions.

Since 2008, some 36 companies have used gaps and loopholes in the law to change their tax nationalities.

The Corporate Tax Dodging Prevention Act, introduced last year, would end this tax scam by treating corporations as American for tax purposes when they are still majority-owned by U.S. interests. It's going nowhere.




http://www.nj.com/opinion/index.ssf/2016/04/how_njs_largest_corporations_legally_dodge_us_taxes_opinion.html
 
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