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“The Real Welfare Cheats”: The Big Problem Of Welfare Dependency In America Now Involves Entitled Corporations

We often hear how damaging welfare dependency is, stifling initiative and corroding the human soul. So I worry about the way we coddle executives in their suites.

A study to be released Thursday says that for each dollar America’s 50 biggest companies paid in federal taxes between 2008 and 2014, they received $27 back in federal loans, loan guarantees and bailouts.

Goodness! What will that do to their character? Won’t that sap their initiative?

The study was compiled by Oxfam and it comes on top of a mountain of evidence from international agencies and economic journals underscoring the degree to which major companies have rigged the tax code.

O.K., O.K., I know you see the words “tax code” and your eyes desperately scan for something else to read! Anything about a sex scandal?

But hold on: The tax system is rigged against us precisely because taxation is the Least Sexy Topic on Earth. So we doze, and our pockets get picked.

John Oliver has a point when he says, “If you want to do something evil, put it inside something boring.” The beneficiaries of tax distortions are counting on you to fall asleep, but this is a topic as important as it is dry.

It’s because the issues seem arcane that corporate lobbyists get away with murder. The Oxfam report says that each $1 the biggest companies spent on lobbying was associated with $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts.

And why would a humanitarian nonprofit like Oxfam spend its time poring over offshore accounts and tax dodges? “The global economic system is becoming increasingly rigged” in ways that exacerbate inequality, laments Ray Offenheiser, president of Oxfam America.

One academic study found that tax dodging by major corporations costs the U.S. Treasury up to $111 billion a year. By my math, less than one-fifth of that annually would be more than enough to pay the additional costs of full-day prekindergarten for all 4-year-olds in America ($15 billion), prevent lead poisoning in tens of thousands of children ($2 billion), provide books and parent coaching for at-risk kids across the country ($1 billion) and end family homelessness ($2 billion).

The Panama Papers should be a wake-up call, shining a light on dysfunctional tax codes around the world — but much of the problem has been staring us in the face. Among the 500 corporations in the S.&P. 500-stock index, 27 were both profitable in 2015 and paid no net income tax globally, according to an analysis by USA Today.

Those poor companies! Think how the character of those C.E.O.s must be corroding! And imagine the plunging morale as board members realize that they are “takers” not “makers.”

American companies game the system in many ways, including shifting profits to overseas tax havens. In 2012, American companies reported more profit in low-tax Bermuda than in Japan, China, Germany and France combined, even though their employees in Bermuda account for less than one-tenth of 1 percent of their worldwide totals.

Over all, the share of corporate taxation in federal revenue has declined since 1952 from 32 percent to 11 percent. In that same period, the portion coming from payroll taxes, which hit the working poor, has climbed.

Look, the period of the Oxfam study included the auto and banking bailouts, which were good for America (and the loans were repaid); it’s also true that the official 35 percent corporate tax rate in the U.S. is too high, encouraging dodging strategies. But we have created perverse incentives: C.E.O.s have a responsibility to shareholders to make money, and tax dodging accomplishes that. This isn’t individual crookedness but an entire political/economic system that induces companies to rip off fellow citizens quite legally.

It’s now widely recognized that corporations have manipulated the tax code. The U.S. Treasury, the World Bank, the International Monetary Fund, the European Union and professional economic journals are all trying to respond to issues of tax evasion.

Bravo to the Obama administration for cracking down on corporations that try to move abroad to get out of taxes. Congress should now pass the Stop Tax Haven Abuse Act, and it should stop slashing the I.R.S. budget (by 17 percent in real terms over the last six years).

When congressional Republicans like Ted Cruz denounce the I.R.S., they empower corporate tax cheats. Because of I.R.S. cuts, the amount of time revenue agents spend auditing large companies has fallen by 34 percent since 2010. A Syracuse University analysis finds that the lost revenue from the decline in corporate audits may be as much as $15 billion a year — enough to make full-day pre-K universal.

Meanwhile, no need to fret so much about welfare abuse in the inner city. The big problem of welfare dependency in America now involves entitled corporations. So let’s help those moochers in business suits pick themselves up and stop sponging off the government.

 

By: Nicholas Kristof, Op-Columnist, The New York Times, April 14, 2016

April 16, 2016 Posted by | Corporate Welfare, Tax Code, Tax Evasion | , , , , , , | Leave a comment

“A Different Set Of Rules”: Tax Dodger Running For Governor In Illinois

If you are not in the Chicago media market, you might not know much about Bruce Rauner, the Mitt Romney-like candidate for governor in Illinois, who is running ahead in the polls against Democratic Governor Pat Quinn.

If Rauner wins, Illinois will have a lot more in common with its neighbor, Wisconsin. Politically, Rauner resembles union-basher and school privatizer Scott Walker. Only Rauner is much, much richer.

In an interview with the Chicago Sun Times, Rauner talked about his career at GTCR, the Chicago-based private equity firm he founded.

“I made a ton of money, made a lot of money,” he told Sun Times reporter Natasha Korecki.

When Korecki asked Rauner, a billionaire who owns nine homes and made $53 million last year, if he is part of the 1 percent, he corrected her: “Oh, I’m probably .01 percent.”

Last Sunday, the Sun-Times broke the news that Rauner has made himself even richer by avoiding taxes and hiding a lot of his wealth in the Cayman Islands.

Rauner has not released his current tax returns, so the full value of his offshore accounts is not verifiable, but the Sun Times was able to document five offshore holdings by Rauner in the Caymans.

A detailed analysis by the Chicago Tribune shows that Rauner used many other complicated tax strategies “out of reach for those of more modest means” to cut his tax bill to less than half the rate paid by other earners in the top bracket:

Thanks to one business-tax strategy, Rauner paid no Social Security or Medicare taxes at all in 2010 or 2011, the Trib reports.

Meanwhile, Rauner is campaigning against “government union bosses,” and teachers unions in particular, and is targeting public employee pensions, with a plan to freeze the Illinois pension plan and convert it into a 401(k)-style retirement account, in order, he claims, to save the state billions.

He says he got into the race because he wants to “reform” public education, and is a big charter school advocate.

“I am adamantly, adamantly against raising the minimum wage,” Rauner said in a campaign event captured on video in January.

He has since backed off that position, and says he supports a minimum-wage increase.

Rauner’s campaign has also had to respond to stories about his phone call to Obama’s education secretary Arne Duncan, pulling strings to get his daughter into prestigious Walter Payton College Prep High School, after the school rejected her.

The Sun-Times reported in January that Rauner made a $250,000 contribution to Payton after his daughter was admitted.

Rauner’s story shows what’s behind all that union-bashing and belt-tightening for the poor and middle class–rightwing billionaires like Rauner push these policies, even as they play by an entirely different set of rules, dodging taxes, pulling strings, and get special treatment most people could never afford.

If he is elected, Rauner, like Walker, might support legislation to loosen the rules to help other wealthy investors and corporations avoid taxes by parking their assets abroad–leaving even less revenue for the public sector he and his rightwing billionaire friends love to bash.

 

By: Ruth Conniff, Editor-in-Chief of The Progressive Magazine; Published at The Center for Media and Democracy, August 6, 2014

August 8, 2014 Posted by | Illinois, Tax Evasion, Taxes | , , , , , , , | 1 Comment

“Magically Becoming Irish”: If Corporations Are People, Shouldn’t They Have To Expatriate Like People?

It’s a common complaint among American expatriates: no matter how far away you go, you can’t escape Uncle Sam’s taxes.

But that’s not the case with American corporations that move their putative “headquarters” overseas, as President Obama noted the other day:

In his toughest comments yet on the subject, he accused big US corporations of trying to play “the system” by “magically becoming Irish” through so-called tax inversion deals.

“I don’t care if it’s legal, it’s wrong,” Mr Obama said. “It sticks you for the tab to make up for what they’re stashing offshore.”

There has been a raft of such deals in recent months which have seen big American companies become “Irish” for tax purposes through buying smaller firms registered here. The same trend is happening in the UK and Switzerland. Fears America is losing out on taxes have made the deals controversial.

It’s understandable if businesses have a different tax code that subjects them to different rules to a certain extent, though shady tax dodging is still an enormous moral and financial problem.

But the issue starts to become even more open and shut once we start claiming that corporations are people. If a corporation has “free speech rights” to buy elections, then it should be subject to American taxes even if it “moves” overseas just like actual American people are. If a corporation like Hobby Lobby has personal “religious rights” not to cover its employees’ contraception, then it’s enough of a person to pay expatriate taxes if it decides to move to Ireland.

It has to be one or the other. You can’t become a person when it’s convenient to your bottom line, but not when it isn’t.

 

By: David Atkins, Washington Monthly Political Animals, July 26, 2014

July 28, 2014 Posted by | Corporations, Personhood, Tax Evasion | , , , , , | Leave a comment

“Put Up Or Shut Up”: Mitt Romney Had The High Ground And Somehow Managed To Cede It

Sometimes, it’s possible to gain and lose the moral high ground very quickly.

When reporters shout intemperate questions at a candidate near Pilsudski Square in Warsaw, the candidate has gained the high ground. When the candidate’s aide tells the reporters, “Kiss my ass” and “Shove it,” the candidate has lost the high ground.

Similarly, Mitt Romney had the high ground when Senate Majority Leader Harry Reid (D-Nev.) made unfounded allegations about the Republican’s tax returns. And yet, he somehow managed to cede the high ground soon after.

For those unfamiliar with the story, Reid claimed he’d heard from a Bain Capital investor that Romney hadn’t paid income taxes for 10 years. Which investor? Reid didn’t say. Why should anyone take the claim seriously? Reid couldn’t say. He heard a rumor, and he’s passing it along.

Team Romney was furious and they had a point. The discourse can’t work this way — prominent officials need to be responsible when making attacks, and not just throw around second-hand innuendo, as if presidential candidates have a responsibility to respond to every unsupported rumor.

Romney had the high ground against a cheap shot. And then he gave it away.

“It’s time for Harry to put up or shut up,” Romney said on Sean Hannity’s radio show. […]

“Harry’s gonna have to describe who it is he spoke with because of course that’s totally and completely wrong,” Romney said Thursday in the radio interview. “It’s untrue, dishonest and inaccurate. It’s wrong. So I’m looking forward to have Harry reveal his sources and we’ll probably find out that it’s the White House.”

Is that so. Does Reid have any proof that Romney failed to pay taxes for 10 years? No, it’s just an unsubstantiated allegation that Reid carelessly pushed in the media. And does Romney have any proof that the White House is Reid’s secret source behind the attack? No, it’s just an unsubstantiated allegation that Romney carelessly pushed in the media. High ground, lost.

As for “put up or shut up,” is this really the phrase the guy who has been hiding his tax returns wants to use?


In recent weeks, Romney and his campaign spokespersons have claimed he always followed the law when paying his taxes and never paid an income tax rate of 0%. Romney also told a national television audience he’d be “happy to go back and look” to see how many years, if any, he paid a rate under 13.9%.

But these boasts are as dubious as Reid’s irresponsible claims — Romney has effectively told Americans we’re simply supposed to take his defense on faith. He could bolster his own rhetoric about his tax history with documented proof, but for reasons he can’t explain, Romney doesn’t want to.

The message: just take his word for it. And what about his willingness to happily go back and look at his paid income tax rates? Apparently, Romney intends to break this commitment just days after making it.

This is not how one keeps the moral high ground.

For Reid’s part, the Senate Majority Leader issued a statement last night that stands by the original allegations.

“There is a controversy because the Republican presidential nominee, Governor Mitt Romney, refuses to release his tax returns. As I said before, I was told by an extremely credible source that Romney has not paid taxes for ten years. People who make as much money as Mitt Romney have many tricks at their disposal to avoid paying taxes. We already know that Romney has exploited many of these loopholes, stashing his money in secret, overseas accounts in places like Switzerland and the Cayman Islands.

“Last weekend, Governor Romney promised that he would check his tax returns and let the American people know whether he ever paid a rate lower than 13.9 percent. One day later, his campaign raced to say he had no intention of putting out any further information.

“When it comes to answering the legitimate questions the American people have about whether he avoided paying his fair share in taxes or why he opened a Swiss bank account, Romney has shut up. But as a presidential candidate, it’s his obligation to put up, and release several years’ worth of tax returns just like nominees of both parties have done for decades.

“It’s clear Romney is hiding something, and the American people deserve to know what it is. Whatever Romney’s hiding probably speaks volumes about how he would approach issues that directly impact middle-class families, like tax reform and the economy. When you are running for president, you should be an open book.

“I understand Romney is concerned that many people, Democrats and Republicans, have been calling on him to release his tax returns. He has so far refused. There is only one thing he can do to clear this up, and that’s release his tax returns.”

The issue isn’t going away.

 

By: Steve Benen, The Maddow Blog, August 3, 2012

August 3, 2012 Posted by | Election 2012 | , , , , , , , , | Leave a comment

“Quasi-Suicidal”: Did Mitt Romney Pay Any Federal Taxes At All In 2009?

On the issue of Mitt Romney’s tax returns, my colleague George Will put it simply: “The cost of not releasing the returns are clear. Therefore, he must have calculated that there are higher costs in releasing them.”

The question is what could be in them that would be so damaging to the Romney campaign. Right now, the most popular theory is that Romney simply didn’t pay any federal taxes at all in 2009. As Joshua Green wrote, ” It’s possible that he suffered a large enough capital loss that, carried forward and coupled with his various offshore tax havens, he wound up paying no U.S. federal taxes at all in 2009.”

But the tax experts I’ve spoken to are skeptical. “Romney had a $4.8 million capital loss carryover coming into 2010,” says Edward Kleinbard, a professor of tax law at the University of Southern California. “So that means no capital gain income in 2009. If you look on the first page [of his 2010 tax return], though, he had lots of ordinary income (interest mostly), and dividends, which are taxed at the same rate as capital gains but which cannot be sheltered from tax by capital losses. So presumably he had some positive income tax in 2009.”

Roberton Williams, a senior fellow at the Tax Policy Center, agrees. “It’s unlikely that his taxable income was zero or even close enough to zero that his credits would zero out his tax liability completely,” he says.

But Daniel Shaviro, a tax professor at New York University, isn’t so sure. “I think there’s an excellent chance that [Romney] didn’t pay any taxes in 2008 or 2009,” he says. But to get from a small federal tax liability to no federal tax liability, Romney would have needed to engage in incredibly aggressive tax planning. Shaviro mentions picking loser investments to get some benefits from “loss harvesting,” unusual tax shelters, and a bevy of other stuff that, frankly, I don’t totally understand.

The overriding question, though, is why would Romney do any of this. As Shaviro says, “If you were running for president and in his position, wouldn’t you think of telling your transaction people not to take you down too low in 2008 and 2009?”

When I asked whether these kinds of structures were simply too difficult to cleanly unwind over a couple of years, Shaviro was skeptical. “The Caymans structures might take some time to unwind, and there might be tax planning issues about not screwing up the unwind too badly, but come on, the guy has been in public life since 2002 and was aiming for the White House from the start. Plus, suppose he had tax shelters in 2009 that created losses. It’s not complex not to do these deals – all you have to do is…not do them.”

For what it’s worth — and, since I haven’t seen Romney’s 2009 tax return, it’s not worth much — my guess is he paid some federal taxes in 2009. The sort of tax sheltering he would have needed to get to zero would be quasi-suicidal for a presidential aspirant. But his effective federal tax rate may only have been 3 or 4 or 5 percent, which would be nearly as bad as zero. Add in a couple of shelters that Romney fears would look particularly bad, and it’s probably enough to persuade him that enduring a bit of bad press for tax decisions people think he might have made is preferable to a media feeding frenzy over tax decisions he definitely made.

The question none of this answers is why Romney didn’t clean up his taxes in 2008 and 2009. But it’s always worth remembering that the people running for office are human beings who procrastinate and make bad decisions and get distracted by other things. And given that Romney moves in a world where aggressive tax planning is the norm rather than the exception, he might simply have failed to recognize what a priority simplifying his taxes really was. My hunch is that the person spending the most time wondering why Romney didn’t get his taxes in order in 2008 is…Mitt Romney.

By: Ezra Klein, Wonkblog, The Washington Post, July 17, 2012

July 22, 2012 Posted by | Election 2012 | , , , , , , , , | 1 Comment

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