The Young Turks' Cenk Uygur filling in for Ed Schultz talked to former Labor Secretary under President Clinton Robert Reich about the recent request by U.S. companies for a tax holiday on the over $1 trillion in assets they have sitting offshore.
At the White House on Dec. 15, business executives asked President Obama for a tax holiday that would help them tap more than $1 trillion of offshore earnings, much of it sitting in island tax havens.
The money -- including hundreds of billions in profits that U.S. companies attribute to overseas subsidiaries to avoid taxes -- is supposed to be taxed at up to 35 percent when it’s brought home, or “repatriated.” Executives including John T. Chambers of Cisco Systems Inc. say a tax break would return a flood of cash and boost the economy.
What nobody’s saying publicly is that U.S. multinationals are already finding legal ways to avoid that tax. Over the years, they’ve brought cash home, tax-free, employing strategies with nicknames worthy of 1970s conspiracy thrillers -- including “the Killer B” and “the Deadly D.”
Uygur asked Reich what solutions there are when we have one party that is a wholly owned subsidiary of big business as the Republicans are and too many Democrats willing to feed off of the same trough. Reich pointed to the obvious, which is campaign finance reform.
Transcript below the fold.
Cenk Uygur and Robert Reich on Corporate Tax Avoidance and the Need for Campaign Finance Reform
UYGUR: But we start tonight with the request by corporate America for a tax break for over $1 trillion they have sitting off shore. In a meeting with president, they asked for a tax holiday so that they can bring the money back into the country without paying their full share of taxes.
I love the terms they use. Wouldn’t you like to take a holiday from your taxes?
When big business does it, it’s not tax evasion, its tax avoidance. I’m sure we’d all like to avoid our taxes, but we don’t have the lobbying power of multinational corporations behind us. And we don’t have a whole political party devoted to making us richer. In case you’ve been living in a cave in the last 30 years, that would be the Republican Party.
Companies are playing a shell game, aided and abetted by the GOP, where they take money in and out country, depending on our tax laws, to make it appear as if they really didn’t make any money here. One common trick is to say that they made all their money in Bermuda, where they have to pay almost no taxes, but that all of their costs were here. Very convenient, of course.
So, in the end, we have a situation where ExxonMobil made $70 -- I’m sorry, $37.3 billion in profits in 2009 and paid zero dollars in U.S. taxes. Bank of America made $4.4 billion in profits, and not only did they pay nothing in taxes, the U.S. government owes them $1.9 billion.
I don’t know how they do that.
And GE, the parent company of MSNBC, in full disclosure, made pretax profits of $10.3 billion and somehow has a tax credit of $1.1 billion.
So I paid more taxes last year than the company that owns all of this? Now, does that mean the companies are unpatriotic and immoral? No.
You see, the most important thing to understand is that companies don’t have nationalities and they don’t have morals. They’re not immoral actors, they’re amoral machines. They’re profit-making robots.
They’re not allowed to have a soul or have feelings. If an executive paid the company’s full taxes out of his patriotic duty, he’d be removed from his post. That’s not how it works.
And remember, Google’s whole mantra is, "Don’t be evil." And they avoided $3.1 billion in taxes in the last three years by doing these same kinds of tax tricks.
Why? Because they’re legally bound to make as much money as possible for their shareholders.
When we had a ban on companies doing business with Iran, Halliburton set up an office in Tehran, Iran. They did it anyway. Their CEO at the time was this man. You might remember him. He’s Dick Cheney.
Later, Halliburton would move its official headquarters to Dubai to avoid U.S. taxes, while continuing to rake in huge contracts from the American government as a so-called American company.
So what’s the answer?
First, we have to recognize the problem. Politicians who talk about being "pro-business" are usually using it as an excuse to give corporations tax breaks. By the way, some of which gets funneled back to him in the form of campaign donations.
So let’s get this straight. No one’s anti-business. We want our big and small companies to do well so they hire more people. But at the same time, we don’t want people using the excuse of being pro-business to funnel our tax dollars to multinational corporations.
Most of those guys that are doing the hiring, these so-called American companies, are doing it abroad anyway. Look, the Economic Policy Institute says that American companies created less than a million jobs here in the U.S., but created 1.4 million jobs overseas last year. So you can see where their priorities are.
If we give a tax break to a company, it must be to specifically create jobs here, period. If they don’t, they can go get their tax break from Bermuda or Singapore.
No more American taxpayer money to finance multinational corporations. There has to be a separation of business and state.
This is not the United States of corporate America. Our representatives in this democracy are supposed to look out for us, their voters, not their corporate benefactors.
Secondly, we have to get much tougher on enforcing our tax laws.
In 2004, the Bush administration allowed, again, so-called American companies to repatriate $312 billion back into the U.S. at the comically low rate of 5.25 percent. The real corporate tax rate is supposed to be 35 percent.
Now do you see why the corporate world loved Bush? That means all of the executives at those companies got much fatter bonuses that year.
We did the Republican strategy of just trusting big business to create jobs with all of those tax breaks that we gave them, and guess what happened? Since that huge 2004 tax break, we have lost nearly seven million jobs.
Would you trust your personal money with an amoral machine? No way, right? Then why do we all trust our collective money with these guys? It’s time we built a wall between business and state so that our government looks out for our interests and not multinational corporations` interests.
Now, get your cell phones out. I want to know what you think.
Tonight’s text survey is: Do you think tax breaks for corporations lead to more U.S. jobs? Text "A" for yes, text "B" for no to 622639. I’ll bring you the results later in the show.
Now joining me is former Clinton labor secretary Robert Reich. He’s a professor at the University of California at Berkeley, and he’s also the author of "Aftershock."
All right, Secretary Reich, I want to play you a clip by President Obama, because there was a bill introduced earlier in the year to actually stop the subsidies for off-shoring jobs, and it didn’t pass. The Republicans killed it.
And here’s what the president had to say about it.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The Republicans in Washington claimed to draw their ideas from a Web site called America Speaking Out. It turns out that one the ideas that’s drawn the most interest on their Web site is ending tax breaks for companies that ship overseas.
The funny thing is, when we recently closed one of the most egregious loopholes for companies creating jobs overseas, Republicans in Congress were almost unanimously opposed. The Republican Leader, John Boehner, attacked us for it and stood up for outsourcing instead of American workers.
(END VIDEO CLIP)
UYGUR: Secretary, is that right? I mean, that seems so unbelievably egregious.
ROBERT REICH, FMR. LABOR SECRETARY: Well, Cenk, when you said a moment ago that this is the United States of corporate America, or at least that’s what it seems, that’s egregious enough.
I mean, big corporations are arguing in terms of getting more tax breaks or getting a tax holiday that they need it in order to have an incentive to create jobs in the United States. But most big corporations now have plenty of money.
Corporate profits are higher than they’ve been in years. In fact, big corporations are now sitting on almost a trillion dollars worth of cash. They’re not creating jobs in the United States, they’re creating jobs abroad.
UYGUR: So the fact that they kill a bill that would have stopped, you know, the loophole that allows them to get a subsidy for off-shoring, I mean, I feel like that’s such a no-brainer for the Democrats, I almost want to pull a Jon Stewart and just do this whole show and the next show and the next show after that about that.
How did the Democrats blow that? Why don’t they take advantage of that and tell the American people what’s happening?
REICH: Well, there are a lot of no-brainers for the Democrats when it comes to corporate malfeasance or nonfeasance.
Cenk, one of the problems -- and I don’t want to tar all Democrats with this, but at least some Democrats with regard to campaign donations are drinking at the same trough as Republicans. They’re going to big corporations.
Now, earlier this year, the Supreme Court, you’ll remember, said in one of the worst Supreme Court decisions in history, in Citizens United against the Federal Election Commission, that corporations are people and they’re entitled to provide as much money to campaigns and to politicians as they want. Otherwise, their First Amendment rights would be breached.
Well, you can’t have it both ways. You said it earlier, and I agree with you, that corporations are not people. They’re just machines. They are just designed to maximize profits.
If we actually treat them as people and say they have First Amendment rights to undermine and corrupt our politicians and our political process, then we’re really in trouble, because they don’t really represent America and Americans.
UYGUR: Well, they keep calling them American companies, or even corporate America. But do these so-called American companies have any obligation to America?
REICH: Well, unfortunately, they don’t. I mean, these global corporations have a primary obligation under the law, and also in terms of economics to their shareholders, to maximize shareholder returns.
That’s what under American capitalism corporations are supposed to do. They’re not obligated to maximize jobs. And it turns out these days, the most rapidly growing markets are in China, India, Brazil, several other rapidly growing markets, and so American corporations are over there not only selling but also creating jobs. Not here.
UYGUR: You know, the thing is, I don’t want people to get me wrong. I actually don’t think that’s crazy or bad. I get why businesses want to start factories in China and why they’re using India for labor, et cetera. I understand that. But what drives me crazy is the idea that we should be subsidizing that.
REICH: Exactly. Cenk, I couldn’t agree with you more.
In other words, corporations should be, according to the way we organize capitalism, maximizing shareholder returns, maximizing profits. So they should be going all over the world. But there is no reason for us, taxpayers, to be subsidizing those corporations, and then those corporations taking those subsidies, or those tax breaks, and using them for creating jobs all over the world. It makes no sense at all.
UYGUR: Unfortunately, I’m going to have to ask you the question that we always run into here. What can we do about it? Because the seems like the politicians, honestly, a lot in both parties -- certainly the Republicans are a wholly-owned subsidiary of multinational corporations, but the Democrats are partly owned, as you explained.
How do we get beyond it when they have already bought the politicians?
REICH: Well, what we have to, I think all of us, get serious about campaign finance reform. I mean, eyes glaze over. It’s not an exciting topic. We’d much rather talk about holding on to health care and everything else. But unless we actually stem the flow of corporate money into American politics, everything we want to do, everything we believe in is jeopardized.
UYGUR: Secretary Reich, thank you so much for joining us.
REICH: Thanks, Cenk. Happy New Year.
UYGUR: Happy New Year to you, too.