Are We the People the boss of giant multinational corporations, or are they the boss of us?
Imagine, if you will, going to the IRS and saying, "I don't think the tax rate is fair so I'm not going to pay it." Regular Americans can't do that. But Apple just did.
Apple's CEO Tim Cook was interviewed by The Washington Post early this month. He was asked about the vast sums of profits that Apple has shifted into overseas tax havens thanks to a loophole in US tax law that lets them "defer" paying taxes on those profits as long as the money technically stays outside the country. Cook said (emphasis added, for emphasis):
And when we bring it back, we will pay 35 percent federal tax and then a weighted average across the states that we're in, which is about 5 percent, so think of it as 40 percent. We've said at 40 percent, we're not going to bring it back until there's a fair rate. There's no debate about it.
What would happen to any regular American if they did what Cook did, and said they they aren't going to pay taxes because they don't think the tax rate is "fair"? (Hint: Jail. And maybe 2 or 3 years added to the sentence for the contempt of saying, "There's no debate about it.")
But Apple is a huge multinational corporation, and these days huge multinational corporations are the boss of our Congress. So, CEO Cook gets away with it -- and with keeping $181 billion in tax havens to dodge paying $59 billion in taxes. Cook knows he can just come out and say they are not going to pay their taxes until there is a "fair rate."
Of course, huge multinational corporations will tell you a "fair rate" would be zero. Or better yet, how about We the People just bow down and pay taxes to them. The corporate tax rate used to be 50%. CEOs complained it was "unfair" so it was lowered to 35%. Also, by the way, Apple can deduct taxes it pays elsewhere, including to states, from its federal tax bill.
Think about what We the People could do with that $59 billion Apple owes us.
In all multinational corporations have more than $2.4 trillion stashed in tax havens, dodging maybe $700 billion in taxes.
Think about what We the People could do with that $700 or so billion they owe us.
Meanwhile
Americans for Tax Fairness released a new investigative report showing that Gilead Sciences exorbitantly priced hepatitis C medications -- price gouging ill American patients -- then shifted billions of dollars of the resulting profits to offshore tax havens to dodge taxes.
An August 21 news story in FORA, an Irish business publication, confirmed key findings of the report:
Company filings show that one of the firm's main Irish subsidiaries had revenues of $2 billion in 2012 and made a full-year profit of $1.3 billion but paid nothing to the Irish exchequer as the firm was tax resident in the Bahamas - where zero corporate taxes apply.
At the end of the year, after which the subsidiaries finances are not publicly accessible, the Irish subsidiary had accumulated profits of just under $7 billion.
The company also transferred the ownership of one of its most valuable money-makers, which it acquired for $11 billion, to a separate Irish subsidiary.
So, this company gouges sick Americans and shifts the profits out of the country to dodge taxes. Are We the People the boss of these giant corporations, or are they the boss of us? Whose government is this, anyway? Who is our economy for?
"The Little People Pay Taxes"
Times have changed. People and companies didn't used to get away with snubbing their nose at We the People, and doing things like dodging taxes.
In the 1980s Leona Helmsley was known as the "Hotel Queen." Helmsley and her husband Harry were known for buying apartment buildings, forcing out the tenants, and converting them into condominiums. The Helmsley real estate empire included the Empire State Building.
They also owned hotels. Leona ran as many as 30 Helmsley hotels, with the luxurious Helmsley Palace at the peak, and became famous after she was featured in advertisements.
But Helmsley became known as "the Queen of Mean," because she was notorious for doing things like abusing employees, firing them at Christmas, even evicting her son's widow a few days after he died. Eventually a dissatisfied employee turned her in for various tax crimes and she was indicted on 235 state and federal counts.
The Helmsleys were charged with using hotel money to buy personal items to evade income taxes. Helmsley famously said of the charges, "We don't pay taxes. Only the little people pay taxes."
We the Little People sentenced Helmsley to 12 years in jail for evading $1.7 million in taxes (eventually resulting in 19 months in jail and 2 years of home arrest.) At her sentencing the judge said:
"There is a community that needs to be served by the enforcement of the law. . . . It is my judgment the motion for sentence reduction should be denied."
Griesa said that Helmsley's conduct had been "deliberate, fraudulent, directed against the United States government. It involved evasion of taxes."
Helmsley was sentenced to jail for evading a pittance of $1.7 million in taxes. Today Apple owes $59 billion. In this age of "mass incarceration" for regular people, imagine a wealthy Wall Street banker or corporate CEO going to jail for something. Actually, you can't even imagine it.
No, instead this is today's reality: Lawmakers Overseeing Wall Street Given Bigger, More Favorable Loans Than Others: Study.
Senator Wyden Says End Deferral Loophole
Some people are trying to restore our democracy, and make We the People the boss of the giant corporations and wealthy CEOs again.
Senator Bernie Sanders has been calling for ending this deferral loophole for a long time. His residential campaign platform called for using the resulting revenue to pay for $1 trillion of infrastructure repair. Senator Elizabeth Warren has also called for ending this loophole.
Last week Oregon Senator Ron Wyden penned an op-ed calling for an end to this corporate tax haven "deferral" loophole, titled "Ending the Biggest Tax Rip-Off -- Tax Deferral." In it Wyden wrote:
...[Tax deferral] is the rule that encourages American multinational corporations to keep their profits overseas instead of investing them here at home, and it does so by granting them $80 billion a year in tax breaks. This policy is as foolish as it is unfair. It simply defies common sense.
Most Americans probably aren't familiar with deferral ...but ... some of the most profitable companies in the world can put off paying taxes indefinitely while hardworking Americans must pay their taxes every year.
Unfortunately, Wyden resorts to offering to bargain with the corporations, offering lower tax rates if they would please invest in the US. Like so many others, Wyden has forgotten that Congress is supposed to be the boss of the corporations.
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This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary and/or for the Progressive Breakfast.
