By Ray Stern
By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
A year ago, Citizens for Tax Justice, a Washington nonprofit, studied the tax returns of 280 corporations. What it found was a Beltway version of a mafia protection scheme.
From 2008 to 2010, at least 30 Fortune 500 companies — including PepsiCo, Verizon, Wells Fargo, and DuPont — paid more for lobbyists than they did in taxes. They collectively spent $476 million sucking up to Congress, buying protection for tax breaks, loopholes, and special subsidies.
It didn't matter that these same 30 firms brought home a staggering $164 billion in profit during that three-year period. They not only managed to avoid paying taxes. They actually received $10.6 billion in rebates.
Defenders of the system argue that most deductions don't go to large corporations. That's true. Purely in terms of dollars, the lion's share go for mortgage interest, employer-paid health insurance, retirement plans, and Medicare benefits.
The difference is these tend to benefit everyone. They're designed for the greater good, reinforcing the pillars of self-determination: home ownership, savings, and healthcare.
But there's another part of the tax code where 99 percent of America is barred from entry. It's where Congress sells loopholes and subsidies to those with the wallets to pay. They not only screw the rest of the country — which is forced to cover the tab — but turn any notion of a free market into situation comedy.
Monsanto managed to pay 22 percent — well below the supposed corporate rate of 35 percent. But that's nothing compared to DuPont, which received as $72 million rebate — despite profits of $2.1 billion.
You don't need a Wharton MBA to see how damaging this is to the nation's financial health. Big companies are given incentive to lard up on lobbyists, accountants, and lawyers rather than use that money to improve products and services. And while small businesses may collectively be our largest and most stable employer, we've rigged the game against them, since they can't afford to buy congressmen of their own.
"The tax code is a mess," says Congressman Chris Van Hollen (D-Maryland). "I support tax reform, but not reform that's simply a Trojan horse for giving another round of windfall tax breaks to the very wealthy."
And that's the problem. President Obama and Democrats have railed for years over this brand of favoritism, only to cave like the French army at the first whiff of resistance.
Republicans are worse, prattling on about free markets while protecting just about any market-distorting loophole if the money's right. Mitt Romney, the poster child of off-shore tax schemes during his time at Bain Capital, claims he has a plan to close loopholes. He just refuses to say how he'll do it.
But if you're not being bought with weekend golf retreats at Augusta National, it's easy to find giveaways we all can agree the must end. Introducing the 10 most corrupt breaks, designed to do nothing but pervert America's economic strength:
How? By pretending to be Irish.
In the late 1980s, Apple decided that Ireland's 12.5 percent corporate tax rate was a much more comely figure than America's 35. But Steve Jobs didn't want to move to Dublin. Fortunately, Congress allowed him to fake it.
Apple created an Irish subsidiary. Then, with a flourish of paperwork, it transferred its most valuable assets — its patents — to Ireland, comically forcing its U.S. headquarters to pay leasing fees for its own inventions.
Nothing actually had changed in the way the company operated. Apple simply had new paperwork saying it was partial to warm beer and fiddles, allowing it to dodge a substantial part of its U.S. tax bill.
But that wasn't the end of the scam. The Irish subsidiary is partially owned by another company, Baldwin Holdings, which doesn't even publicly list an office address or a phone number. But it does have paperwork saying it's headquartered in the Virgin Islands, where it can stockpile its income tax-free, outside the reach of the IRS.
Most people associate such exhaustive money laundering with drug cartels. But it's now standard practice at firms like Eli Lilly, Google, Microsoft, Pfizer, and Facebook. The only difference is that when drug dealers do it, the government shows up with Kevlar and automatic weapons instead of a refund check.
Congress, meanwhile, is paid to look the other way, leaving the federal treasury to serial molestation by our most prominent citizens.
"The original sin is that we treat a wholly owned subsidiary in the Cayman Islands as if it was an arm's length separate entity," says Dr. Calvin Johnson, a tax expert at the University of Texas Law School. "A pocket transfer from the U.S. to the Cayman Islands is like a transfer from your left pocket to your right. Any system that treats a Cayman Island subsidiary as if it is a separate entity is just asking to be destroyed."
Romney claims he will keep the richest in America paying Sixty Percent?
Romney pays what less than Fourteen Percent?
Right Romney we don't think your Lying.
Sorry Romney I am a Hard Working American, you know, one of the Forty-Seven Percent you don't care about.
If Flipflopper Mitt gets in we the middleclass will have to support his rich friends so our taxes go up while the rest sat on lazy behinds
The biggest tax loophole that needs to be closed is to start requiring people on all public assistance to pay their fair share of taxes. For example, if somebody gets $600 a month in Section 8 housing payments and another $300 in food stamps, that is $900 a month in taxable income that must be paid because if my job only paid me that same amount I would have to pay taxes.
Presidents are limited to what they can do on their own; they need Congress and the House of Representatives approval to get things done. Oboma doesn’t appear to know how lead or to work together; and remember that Barack Hussein Obama has increased taxes by 2 trillion dollars and increased the national debt by 6.5 trillion dollar in only 4 years. Even bumbling Bush didn’t do that much damage in 8 years. Mitt Romney says: this is what I plan on doing. He will meet with the Democrats and Republicans and together they will work out how to accomplish what he wants to do. There is going to have to be changes to the social programs and nations spending. The government can’t keep giving out more than it takes in. The Democrats do not appear to understand that if they keep this up, soon there will be nothing left to give away. We will be totally bankrupt and owned by China, wait and see how much free cheese you get when China is running the U.S.A.
Barack Hussein Obama has been a very destructive force to the U.S. economy; he has already added 6.5 Trillion dollars to the national debt. If by chance he gets re-elected and then he doubles the national debt. It will be too late to say…Oops! Beware of the Enemy from within!!
Now don't let me hear you liberals complain about tax loopholes because you people are the ones who want to exploit them. If the Republicans want to close any loophole you complain but yet if you try to close it it is okay? You don't really want any loopholes closed, you just act like you do. The biggest loophole that must be closed is anchor babies, welfare and public assistance. Time to put a stop to all of them.
The author confuses the mortgage deduction with the taxpayer subsidizing the underlying home (or yacht). The mortgage interest deduction subsidizes the cost of a loan not the house (or yacht). If Steve Ballmer paid cash for his $200M yacht he gets no mortgage interest deduction and if he financed the entire $200M he runs up against the $1M max.
Then there is the matter of the mortgage interest deduction phasing out for people with an adjusted gross income > $166K. Since Steve makes far in excess of $166K he probably faces the maximum reduction of 80% of his itemized deductions so for that $200M mortgage on his $200M yacht he would get the same mortgage interest deduction as someone making < $166K who owned a $200,000 house.
So much for the taxpayers subsidizing that $200M yacht.
If this were a creative writing class I'd say you get an A+ for imagination and nonsensical comparisons! For example the $500 per week unemployed electricians taxable income compared to $120 million tax incentive for building a stadium.
The taxes due on $500 per week or $26,000 per year with zero deductions and zero dependents filing single equals $2006 or 7.7% of their gross income. The $500 per week is money in his pocket and he doesn't have to do anything for it. He doesn't have to pay any employees or take any risk of any kind other than not being able to find a job when the benefits run out.
The stadium deal is not money in the team owners pocket. The stadium is owned by the City of Oklahoma City and it also plays host to major concerts, family and social events, conventions, ice shows, civic events and sporting events from local universities and high schools.
The team actually pays rent to use the stadium and the residents of the city actually voted to increase their sales tax 1% to pay for the renovations.
Again it's not income or cash in the team owners pocket merely a place for his team to play that they rent.
I'm sure this logic is lost on you and a complete waste of my time. There are many more examples in your article that are possibly technically correct but in truth the outcome is much different that you write.
Although the core of your article is right on the money... the tax laws are ridiculous at best stupid at worst.
My question is this... What's it got to do with Romney? He hasn't been the one writing the tax laws in this country!!! For you to even suggest that he or any other politician including the current president can single-handedly change the tax code is moronic!
Current party in charge couldn't do it when they controlled the office of the President, The House and The Senate. Maybe I should say they wouldn't do it. The truth is there is very little incentive for the congress to make the changes we all want because we don't hold them accountable for much in most cases.
Go out and ask any ten people on the street and see it they can name our 2 senators and 8 representatives. My bet is most don't even know how many we have much less which party they represent or how they vote on any issue.
In my humble opinion it's lame journalism to link anyone Romney included to this article. But then I guess you gotta get your shots in justified or not!
Good luck with this one... I have a feeling it's going down to the wire!
Have you ever considered gettig a "JOB"............................LOL
Oh that is BS that taxpayers are not subsidizing that yacht. Sure IF he paid cash for it we would not be subsidizing it, but he didn't and with the tax loophole being in existence it's an incentive to finance it that people will take.
Your second paragraph is just as much BS. Ok, he makes enough to force him into the same mortgage interest deduction as someone making >$166k who owned a $200,000 house but it's still taxpayers subsidizing a $200M yacht no matter how you slice it. Just because he is paying the same as anyone else would is not the point. The taxpayer IS subsidizing that yacht.
You are really picking at straws in an attempt to spin this but it's just not working.
@HermanBernstein I have a good job. Do you have one?
@Flyer9753 How much welfare do you cost the taxpayers?
@Flyer9753 No, it is taxpayer's subsidizing the interest on a $200,000 loan.
Not a $200,000,000 yacht.
In fact no different than if he bought a $200,000 vacation home and financed it. Exactly the same size deduction.
But it sure sounds impressive to say $200M yacht. Wow! Steve Ballmer is getting a tax break on a $200M yacht, oh my! Yep, at 4% interest it would knock $8000 off his income and save him maybe $3000 on his tax bill.
No different than the tax deduction you get on a $200,000 loan on your house.
Sucking Joe Arpaio's Johnson is not a real job.
hmmm... let's see... I have owned my own business since 1992, I started it entirely with my own funds, no loans. We have been profitable since 1995 and employ 22 full time employees all of them with profit sharing and health care.
I have never taken any welfare assistance, nor student loans or tuition assistance or anything else. I bought my house for cash.
So the answer is none.
How much welfare do you cost the taxpayer?
Tomato, tomato and exactly what is wrong with this country.