You hear that great sucking sound? It's the hundreds of billions of corporate dollars that flood to off-shore tax havens. Time to turn off the spigot...
There is some movement here:
Saying that offshore tax havens deprive the United States Treasury of tens of billions of dollars of revenue a year, two senior Democratic senators are pushing to help reduce the federal deficit by tightening rules that allow hedge funds, derivatives traders and corporations to skirt federal taxes.
A bill unveiled Tuesday by Senator Carl Levin, chairman of the permanent subcommittee on investigations, would change Internal Revenue Service regulations that allow American traders of credit-default swaps to avoid paying federal taxes on many transactions that begin in the United States. It would also tighten rules that enable some hedge funds and corporations based in the United States to reduce their federal tax liabilities by declaring themselves foreign companies and moving a small part of their operations overseas.
In an effort to discourage companies from using bookkeeping maneuvers to shift their profits to tax havens, the measure would also require American corporations to provide the Securities and Exchange Commission, and the public, with a country-by-country breakdown of their sales, employment and operations.
Kent Conrad sees real money here:
But the chairman of the Senate Budget Committee, Kent Conrad, a North Dakota Democrat, said on Monday that closing offshore loopholes had the potential to pare more than $1 trillion from the budget deficit over the next decade. Introducing his own plan to cut $4 trillion from the deficit with a combination of spending cuts and revenue increases, Mr. Conrad said that by taking aim at the tax shelters identified by Senator Levin, the federal government could reduce the deficit and lower the corporate rate to 29 percent from 35 percent without increasing taxes on the middle class or imposing severe cuts on Medicare or Social Security benefits.
Indeed, as U.S. PIRG showed recently:
The practice of using offshore tax havens has flourished in an era of increasing secrecy and dangerous deregulation. Lobbyists for corporations with offshore tax havens have been able to count on the fact that the missing funds will never be accounted for. Many of the largest corporations have banded together to fight reform every step of the way – often with huge war chests. U.S. PIRG identified several large corporations that happily take taxpayer dollars for government contracts, make heavy use of tax havens, and then spend lavishly on campaigns and lobbying to resist reform.
According to the GAO, over 80 percent of the biggest U.S corporations maintain revenues in offshore tax haven countries. The names on the list are familiar: American Express, A.I.G, Boeing, Cisco, Dow, Hewlett-Packard, J.P. Morgan Chase and Pfizer – among others.
One jurisdiction that has gained notoriety for its willingness to accommodate tax havens is the Cayman Islands. 11 According to GAO, over 18,000 companies exist in one five-story building in the Cayman Islands. President Barack Obama, as a candidate in 2008, once remarked, “That's either the biggest building or the biggest tax scam on record.”[emphasis added]
This seems like a better approach than the really dumb idea of actually
giving corporations a "tax holiday". We'd actually be doing them a favor: ending the off-shoring of profits would simply mean they don't have to spend money on that exercise. See, a public service for corporations. (though Conrad has also undermined the attempt to
end the Bush tax cuts for the wealthiest...sigh)
So, let's see: end corporate off-shore tax havens and end dumb wars and, presto, no need to mess with Medicare or the other stuff that real people need.