Some Companies Getting Bailed Out Have Offshore Tax Shelters
By Susie Madrak Saturday Jan 17, 2009 2:00pmDo you ever get the feeling that things are, oh, I don't know, a tad unbalanced in this country?
A majority of America's largest publicly traded companies and the U.S. government's largest federal contractors -- including some receiving millions in federal bailout money -- use multiple subsidiaries in offshore tax havens to conduct business and avoid paying U.S. taxes, a new report finds.
The new Government Accountability Office (GAO) report, released today by Sens. Byron L. Dorgan (D-N.D.) and Carl M. Levin (D-Mich.), lists Citigroup and Morgan Stanley as having set up hundreds of tax haven subsidiaries, along with American International Group and Bank of America. Also in the tax-haven list are well-known companies and such federal contractors as American Express, Pepsi and Caterpillar.
GAO, searching publicly available data filed with the Securities and Exchange Commission, determined that 83 of the 100 largest publicly traded corporations and 63 of the 100 largest federal contractors maintain subsidiaries in countries generally considered havens for avoiding taxes. Dorgan and Levin said they requested the updated report from one several years ago because they are focused on combating offshore tax abuses, which they estimated cause $100 billion in lost U.S. tax revenue each year.
GAO auditors did not review the companies' transactions to independently verify that the subsidiaries helped the companies reduce their tax burden. The GAO said only that the companies had subsidiaries located in jurisdictions considered tax havens and that historically the purpose of those subsidiaries is to cut tax costs.
The practice is legal, but Dorgan and Levin are hoping to gain the support of President-elect Barack Obama for legislation that would outlaw it.
To illustrate the problem, Levin said the report found that Citigroup has set up 427 tax haven subsidiaries to conduct its business, including 91 in Luxembourg, 90 in the Cayman Islands and 35 in the British Virgin Islands. He said other havens include Switzerland, Hong Kong, Panama and Mauritius.
Login or Register to post comments.
Past time to outlaw these kinds of tax shelters and establish extremely punitive penalties (tack on an additional 50% perhaps) for violations. Far too many corporations in this country pay little or no taxes when they should pay at least as much as private individuals.
Only way to make it work is cart people off to jail.
If you go with a 50% penalty then people will take the risk anyways.
This could really improve our economic standing as well, if corporations like Exxon Mobil with their record profits and numerous tax breaks, had to pay a little bit back for our natural resources.
GAO Study: Most US corporations avoid income tax
http://crooksandliars.com/2008/08/16/gao-stud...
Most corporations don't pay U.S. income taxes
Great post.
As they possibly close this door, I hear the rear window is being opened.
If they close the tax loop-hole completely, how many businesses leave? And with them, jobs and income tax.
It would be nice if the government managed to level the playing field in the US, but it won't. That requires an ability to put the populace over money. Yeah, good luck on that one.
according to the length of time that it stays in this country.
The longer it stays the less tax.
It is simple.
I'm nowhere close to being an economist, but wouldn't the exact opposite be beneficial? Tax those who keep money offshore, and give tax breaks to businesses who keep money (and therefore jobs, people and capital) in the country?
Some of you financial types give me some guidance on this.
If you produce goods and services for this market, you should pay LESS tax if you produce those goods and services here.
That is not the way it is done now, unfortunately.
Our corrupt congress grants tax benefits to a corporation even though they take their entire production offshore.
It is Government by the corporations, for the corporations… and their buddies.
Thus far.
/clutching pearls
is busy stuffing cash in envelopes for politicians.
Two points:
1. Please define: producing goods and services here. Does that mean the actual production and service takes place within the continental US? What about the HQ, does that also have to be in the US? Incorporation? Shareholders? Once you do, here comes the loophole.
2. Production moves off shore due to... ohh what the hell... Do you understand anything about economics??? Production moves off shore because producing it in the US costs too much, i.e. American worker too expensive.
If you don't want to support this system, which I don't by the way, BUY local and stop going to Wal-Mart, Sam's or Costco.
the cost of production involves internal and external costs.
The cost of labor is only part of that cost.
Additional costs are environmental, safety law compliance and taxes.
Corporations do cost benefit analysis and place their production accordingly.
Their analysis does not consider the cost to societies, to human beings or to nation states.
Corporations are amoral.
When we give them tax benefits no matter where they place their production, we are giving away things we do not need to give away.
When we negotiate trade treaties that do not address environmental degradation we are giving away things we do not need to give away.
Taxing offshore production for goods and services that come into this market would equalize othewise unequal components. Components that can be greatly improved upon.
Consumption in the US will be much like consumption in China when wages are equivalent. That is to say very little. Although we might be producing more.
Environmental degradation world wide is going to heighten because ultimately it will know no borders.
The ultimate consequence of the inevitable high cost of energy will be to the neutralize the advantages one country has over another because of their labor costs or their willingness to kill their own people with environmental degradation or minimal industrial safety outlays.
And once again you attempt to insult me when twice I have demonstrated that your confidence in your own understanding of topical matters is highly misplaced.
Here
Here
As for supporting the corrupt system, I do everything I can to avoid it.
You are rather humourous. I really am not trying to insult you, but find it funny you think so.
Anyway, I think you are on to something above about setting regulations.
My rebuttal, you should be demanding more from the government (free healthcare, universities, etc.), if there are more of your import taxes (leaving out WTO objections).
They're talking about regulating corporations that do businees with, or receive subsidies from, the federal government.
But all the American businesses that have been moving operations overseas are not doing so hot these days.
Just an observation.
The ones that stay here ain't doing so hot either...
...In case you didn't notice.
The corporate tax just gets tacked on to the price of its goods and services, and passed on to YOU.
Therefore, the corporate tax is just a "hidden" tax -- and we pick up the tab for it.
Tax a human's income -- fine. Tax a corporation's income -- silly. Wait until that income is passed along as wages to a human being, and THEN tax it.
We've been brainwashed to believe corporations are like human beings.
in my world, if they kept their production here.
The more of their production they move offshore, the more tax they pay. If they want to access this market.
If they don't want to access this market then you have no control. But then, why would we care.
I take it you live in a one nation world, or there is no WTO.... Typical american, you probably don't even own a passport (OK, that's my insult to you... BOOYAH!)
Here is Chomsky on two divergent views of globalization.
You have one, I have another.
Yes, I do have a passport and I have used it extensively.
The WTO is the first to go in my world.
The old girl had a few screws lose, but when it came to government she was dead right. When the head of the fish stinks, so does the rest of it. The greed factor in corporate America as well as the government that is supposed to set the laws to rule are both corrupt. We are no longer a country where things get done for the betterment of all, but rather for the betterment of the few.
Just ask yourself, who writes the tax law that allows these companies to get away with not having to pay taxes in tax havens around the world? Look no further than D.C. The very morons we elect to do the peoples business are the very people that have sold our country out from under us by allowing this to happen. Not to worry. The second revolution is coming.
a few days ago where some Rep. (I can't recall his name) was grilling the head of the TARP "transparency" group.
The Rep. requested details of which banks are getting what money and what exactly they are doing with it and the guy said, "I don't think I can tell you that."
Then Barney Frank ORDERED him to give him the information and basically the guy told Barney Frank that he cannot give him the information.
I've tried to retrieve the clip, but I did find this article that does relate to the secrecy of what's been going on:
http://www.huffingtonpost.com/2009/01/08/the-...
We need to realize these corporations don't give a rats ass about the United States. They are "multi-national".
and links to files when you witness something like that.
Barney Frank talks a good talk and he puts on a good show.
But in the back room where the deals are done out of sight, he is just another Corporate Trained Seal.
The man doing the grilling was representative Grayson. He was getting under the skin of Donald Kohn from the Federal Reserve. The bottom line for me is simple. You want to use tax payer funds to bail out your sorry asses, then there should be a law which demands to know how and to whom those funds are being given to. If you go back into the archives at Firedoglake, they had the video, but you can probably find it on You Tube.
has no teeth in its oversight provisions.
It is pure window dressing and our corrupt congress knew it very well when they passed it,
BEFORE THE ELECTION.
The joke is on us and it is a bad joke.
Bad news for you and everyone else (govt. included).
You see, the govt. (Ms. Alice X can check this if she wants) bought preferred equity stakes in the banks. Simplified: No, you don't get to see where the money went, unless you get seats on the board.... oops, wonder why they didn't call the board meeting?
Anyways, the idea was to prop up the Stock market, unfortunately preferred stock is generally not traded on the major Stock Exchanges and done OTC. End result, DOOM!!!!
http://www.youtube.com/watch?v=Mj0JAfq4esk&fe...
the incoming treasury sec Geithner hides some of his income in his maid.
but I am more worried that he was the one overseeing that the Fat Cats got 100% of their losses covered with hundreds of billions of taxpayer money.
This is a slap to the american taxpayer. Wonder if they can get the money back. I am so pissed off about it. Those people need to be arrested.
Why would you arrest someone for using a legal loophole. Its smart.
Wouldn't you say your gripe is with the lawmakers?
Politicians.....poli = many. Tics = blood sucking creatures. Our gripe is with those who make the laws and we must demand immediate change as well as accountability. these guys in office are all lawyers and each of them knew exactly what the game plan was. After all, these people in D.C. live or die by the amount of donations and soft money they receive from those very companies that want them to do their bidding. Sad but true, until we change the system, corporations are running our country through bought and paid for policy from those who are supposed to be looking out for our welfare, not the welfare of mega conglomerates including banking cartles that have sucked us dry. Eisenhower warned us of the danger of the military/industrial complex and now we have come to realize our worse nightmare.
Really sank hard in Friday's trading. the thing is the market corrected but it and Citi did not bounce much of their lows. The rumor Thursday was that both could be nationalized by this weekend. I suppose even after nationalization the government will keep them off shore so as to save money on taxes.
Yeah ... gov't buys up majority shares, thus nationalizing those banks. Then, to keep those banks "competitive" congress keeps them off-shore. After all, they owe a duty to the shareholders (heh, now the government) to maximize returns.
Circular reasoning in spades! Gotta love it.
Want to know the solution?
Stop paying taxes. Really. If they can do it why can't we?
Fuck the system
Talk to a lawyer about setting up a trust offshore. Shouldn't cost you more than USD 10k.
Just have the new Attorney General sic the IRS on these dudes and demand that they pay up. With what they owe, we could recoup a lot of $$$$s for the Treasury.
The IRS is only the enforcement arm of the US Treasury. The politicians have to put teeth into the law in order to end this NOW!
There's nothing to enforce. These corporations were taking advantage of loopholes in the laws that allow them to do this.
I second Mr. Andy K. Well spoken.
...to call them "loopholes."
1. The laws are created by politicians;
2. who depend upon the corporations for their
"livelihoods" (campaign donations, etc.);
3. so the tax advantages are built-in to the laws;
4. so the corporations can continue to rob the public;
5. so the corsp can continue to pay -off the politicians
6. so they can make laws with tax advantages for the corps....
So, they're not really "loopholes" (meaning some little quirk in a law that some clever acct. takes advantage of) -
it's built-in robbery. It's a game - they win - we lose!!
I would think if we tax less for corporations to stay here in America, have affordable healthcare for all, affordable education.
Comman sense practices, have been abolished and greed and lust for the almighty dollar, has outweighed fairness. America wake up, pay attention to what is happening and start fighting back.
If you don't pay taxes in America you are not an American company and should not be allowed to do business in America!
This is just stupid greedy bullshit these rich bastards have been pulling off for years now.
Fuck these off shore bastards let them fail thay are not American!~!!!!
I love this. It really makes me appreciate the education system.
.
.
.
You know latin too... how cool
and you have a passport, wow, you really are special.
have you worked for a big corporate entity Suzie? You are the only poster I've seen on this site defending crooks and liars because they can "legally do it". That makes it right?
Never said it made it right. It does however make it logical and legal.
I find it rather ironic that people complain about a system that treats them like this, yet do nothing about it. If you want a better social system, which there are, the US probably isn't the best place.
And to your first question, why do you ask? So you can brush me off as a lackey or stooge. Funny.
By the way, Vancouver and the Lafs suck... Go Sens!
Why do people turn the other way on Corporate Crime? It is probably the most devastating crime in our society. It not only breaks people financially, but morally, breaks families apart, affects whole communities, cultures, and demographics. It has an affect on more people then most crimes. So not only do they get away with SLAVE LABOR, TAX CHEATS, and now they are stealing money from the American people. Why do we continue to reward the fascist hand of this Govt. It is sick, it is wrong, and it needs to stop.
Nationalize them all.
this is not surprising at all.....any US company w/ revenue in the tens of millions has tax shelters, or offshore HQs, and what not....otherwise, they simply cannot compete. i don't support it, but it's the reality.
The initiation of violence is evil.
Taxes require the initiation of violence, therefore taxes are evil.
Rid yourselves of the evil of taxation.
Taxes are the means by which a free people pay for the things they can't provide for themselves. Mr. Virtue is a truly greedy pig (who I am sure has benefited greatly from the opportunities in the U.S.), and probably one of the corporate elite now enjoying a beach side view of his former country.
I say deport their butts and take away their citizenship.
The rest of us need to push Washington for rational tax policy and an end to empire building.
You say that free people can't provide for themselves. That's interesting. Why wouldn't a free person/people be able to provide for him/herself? How could someone who sees the evil of the initiation of violence be considered a "greedy pig"? Your speculation about my benefiting from the opportunities in the "U.S." and being one of the "corporate elite" is also interesting. The "U.S.", "corporate"/corporation(s), "country" and "citizenship" are just abstract ideas. They don't physically exist. Like a dream, they may exist in your mind but not mine.
Like most, I've benefited from the market that humanity tries to provide. Remove the belief that "government" thugs have any authority and a truly free market could exist. When the free market finally arrives then the sky is the limit for the values that humanity can create and provide. The free market environment will probably discover the cure for death so the present mindset of you and so many others is probably contibuting to human death. At the very least the mindset that you've adopted is preventing mankind from reaching it's full potential.
As for a "rational" tax policy. Pointing a gun at someone and demanding their property to pay for your agenda is not rational, it's evil. I believe, Mr./Mrs. done, that you are evil. I doubt if you were born that way. Please, for humanity's sake, go to your past and discover your true self.
The folks who make the laws reap the benefits of the laws they make, so they're not going to change the way they do business. This has been going on for decades - has anything changed? No. It's just been magnified now because of the blatant theft associated with the so-called bailout money.
Neither the elected officials nor the corporatists are going to change rules that will eventually stop their gravy train.
...U.S. corporations pay TOO MUCH in taxes! Sez so right here:
"Along with slow-growing Japan, the United States has the highest marginal tax rate on corporate profits of any of the developed countries." - Addled Reich-wing hack, coke-head, and Rethuglican liar (did I repeat myself?), Larry Kudlow, February 09, 2007
Login or Register to post comments.