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That's right folks.  According to the Wall Street Journal (via Raw  Story) 60 American corporation alone have put One Hundred and Sixty-Six Billion Dollars in off-share accounts in order to avoid paying taxes.  Pretty good deal if you can get away with it:

The business newspaper said its analysis of 60 big American companies had found that they had collectively parked a total of $166 billion offshore last year.

That shielded more than 40 percent of their annual profits from US taxes, the report said. [...]

The practice is a result of US tax rules that allow companies to not pay taxes on profits earned by overseas subsidiaries if the money is not brought back to the United States, the report pointed out.

Look at it in these terms.  What of you had a federal tax credit tax law  that allowed you to shield 40% of your income from taxes. Not a deduction, which reduces taxes you owe but a credit law that says 40% of what you earn cannot be taxed - period.  I know I would be dancing in the street if some lawmaker proposed a bill for ordinary people that allowed me to only have to pay taxes on 60% of my family's income.  But that's the problem.  You and I don't get such favorable treatment from the tax code, nor can we afford the accountants and  lawyers to set up such tax dodges for us.  But major US companies can and do.

And the $166 Billion dollars represents just one year's worth of non-taxable income for these 60 companies.  How much have they sheltered in off shore accounts over the past decade or two is not known, but I'm willing to bet we are talking about a number in excess of $1 Trillion.  These are the same corporations that are likely ripping you off with higher gas prices, bigger bank fees and charges, absurdly overpriced medications and god knows what else.  The same corporations that own all three branches of our government.  The same corporations whose lobbyists write our laws and treat our Senators, Supreme Court Justices and Congresscritters out to dinners and golf resort vacations, while you and I get arrested if we show up outside our elected official's door uninvited when we wish to air our grievances.  

Grievances such as the fact that these corporations get away with what in any sane country would be prosecuted as tax fraud.  Except that it is considered tax fraud if you or I are the ones hiding 40% of our income from the IRS.  So, remember this the next time you sit down to your dinner of Ramen or Mac & Cheese, or sit at your kitchen table deciding if it is better to pay your rent or mortgage this month rather than go to the doctor for that chest pain that's been bothering you, or just wondering if Social Security and Medicare will still exist when you hit 65 or 67 or whatever age our fiscal conservatives in both parties think is appropriate despite the fact that you've been looking for full time work since being laid off from your "good job" two years ago.  Think about all those billions and billions of dollars sitting in some Cayman Islands bank snuggling up to billions of dollars of well laundered drug cartel money.  Hey, at least the drug cartels admit they are criminals.

Money you or your descendants will never see, though some billionaire or CEO's compensation will no doubt benefit because all these corporate profits have been hidden away in these stealthy, shady, morally reprehensible tax avoidance schemes.

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Comment Preferences

  •  Tip Jar (9+ / 0-)

    "If you tell the truth, you'll eventually be found out." Mark Twain

    by Steven D on Mon Mar 11, 2013 at 05:19:36 AM PDT

  •  terminology! (3+ / 0-)
    Recommended by:
    Alice Olson, OooSillyMe, MGross

    when you contrast deductions with the ability to shield income, the word you're looking for is "exclusion," not "credit."  if it were a credit, you'd calculate tax on 100%, write it in the "income tax" line, then write in the amount of the credit in the credits section (along with green energy credits, refunds from prior year applied to this year, and other credits).  this is an exclusion: you carve out the amount excluded and its lime it never existed.

  •  I do not blame taxpayers -- any taxpayers (3+ / 0-)
    Recommended by:
    johnny wurster, Roadbed Guy, VClib

    for structuring their affairs so as to legally pay the least amount of taxes possible.  The courts have repeatedly recognized no taxpayer has an obligation to pay one cent more in taxes than the law mandates.  

    The fault lies entirely with those who write the tax laws.  They are the ones who write these incentives into the law.  You cannot write the law to provide a financial incentive for a business to do x, y, and z and then appear shocked -- shocked! -- when businesses do x, y, and z.

    If these businesses did anything OTHER THAN structure their businesses so as to pay the least amount legally possible, they would be violating their duties to their shareholders.  Officers of a company who do NOT do everything legally and reasonably possible to maximize profits for shareholders (that includes minimizing expenses, and taxes are an expense) get sued by the shareholders.

    We need a complete overhaul of the tax system, including the corporate tax system.  We have one of the highest corporate tax rates in the world, but we are in the middle with respect to effective tax rates.  That means that some companies are paying close to the full marginal rate, and others are paying very little.  We need to lower the marginal rate, clear out deductions/exemptions (and a law that allows you to say certain income is not subject to taxes IS a deduction, not a tax credit), so that our businesses all pay an effective tax rate about the same -- a rate competitive with the rest of the developed world.  

  •  this country is run for the 1% at our expense. nt (2+ / 0-)
    Recommended by:
    Betterthansoap, Steven D

    Republicans only care about themselves, their money, & their power.

    by jdmorg on Mon Mar 11, 2013 at 06:03:50 AM PDT

  •  Legalized theft & corruption, part #7,392 (3+ / 0-)
    Recommended by:
    Betterthansoap, Steven D, bear83

    Next up: Fox "news" rants about government across airwaves given to them for free by...uh...government.

  •  There should be no repatriation tax. (4+ / 0-)

    The US has no legitimate claim on income earned overseas (as opposed to income earned here, and hidden overseas)

    As US companies have increasing amounts of oversea subsidiaries and business, it serves as a strong incentive to keep cash out of the country, the last thing we want happening.

    We should join most of the rest of the modern world and abolish taxes on repatriating income.  It'll still get taxed when they pay it out to shareholders and/or spend it on things in the United States.

    •  I don't understand why/how this money (0+ / 0-)

      is not being taxed in the country (countries) where it is being earned in the first place.

      For example, I saw a Tim Horton's restaurant just a few months ago and did some research and saw (horror of horrors, thank god I went to Dunkin Donuts instead) that they were Canadian.  Does that mean that they don't have to pay taxes on their profits?

      * That * seems very odd to me!

      •  It is being taxed in those countries. (3+ / 0-)
        Recommended by:
        Roadbed Guy, nextstep, MGross

        So GE UK makes profits in the UK, pays taxes to the UK, and then would pay tax to the US when / it dividends assets back to the US (where it would get a credit for taxes paid to the UK)

        •  (and Tim Horton's pays tax to the US (0+ / 0-)

          on its profits)

        •  I suspected something like that (1+ / 0-)
          Recommended by:
          johnny wurster

          but I suppose that lessens the outrage quotient of the diarist and probably would best go unmentioned . . ..

          •  Here's how the system works (0+ / 0-)

            You make a product in X country, say the US, sell the goods at a loss to your subsidiary and outsource the profits to the shell companies.  You then turn around and borrow money secured by those parked profits to pay executive compensation, dividends, etc.  The banks involved charge a fee and charge debt service for the loans much less than the tax would be.  The dividends are still paid and people and and entities that own the shares are still taxed on them (though the preferred method for tax purposes is to buyback shares thus turning income into capital gains for owners when possible).  The holding corporation lowers its taxes from the losses, debt service, costs, etc. as "ordinary business expenses, but the shareholders still get a return on their investment.  For financial accounting purposes the corporation makes a a profit.  From a tax accounting standpoint, the US entity does not.

            "If you tell the truth, you'll eventually be found out." Mark Twain

            by Steven D on Mon Mar 11, 2013 at 12:40:56 PM PDT

            [ Parent ]

            •  Eh....sort of. (0+ / 0-)

              First, though, you run your sales prices for the transactions between intracompany subsidiaries by the IRS and get them to sign a document stating that the pricing is reasonable.  You then sell the goods at that price to your subsidiary.  

            •  re: the loan: I don't think that would work. (0+ / 0-)

              In your example, the US company deducts the interest expense on its repayments to the foreign sub, but, of course, the interest income of the foreign sub is Subpart F income and is immediately taxable to the parent company.  So it's, at best, a wash for tax purposes.

  •  Offshore money (1+ / 0-)
    Recommended by:
    Norm in Chicago

    Can money that is parked in an offshore bank be used to colatteralize a loan for onshore investments?

  •  Taking advantage of the tax code is not improper (0+ / 0-)

    I have a friend who purchased a Chevy Volt, but he would not have done so without the tax credit.  Was that improper?

    When I took advantage of tax credits for putting solar power on my house, was this improper?

    When my wife and I were both working and renting an apartment, we decided to buy a home, in part to reduce the high taxes we were paying.  Was that improper?

    I have salary income that does not get currently taxed, as it goes into a 401 K, is that improper?

    Right now total government spending is about 38% of GDP and government tries to collect taxes to pay for this spending.  So tax factors are a large part of what consumers and businesses decide to do.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Mon Mar 11, 2013 at 09:39:28 AM PDT

  •  And the offshore factories to avoid paying labor? (1+ / 0-)
    Recommended by:
    Steven D

    I bet that $166 Billion is only a fraction of what they're not paying by using Chinese slave labor instead of American workers.  Shit, I'd trade zero corporate taxes to get the manufacturing jobs back, with the economic mulitplier they bring.

    A middle class worker spends ALL of his money here.  Those corporate profits are spent by globe trotting CEOs.  How much shopping at the mall do you think they really do?

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