By Ray Stern
By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
Last year, Senator Patrick Leahy (D-Vermont) introduced the Protecting American Taxpayers from Misconduct Act. If a court orders damages for malfeasance, U.S. taxpayers would no longer be forced to grab a piece of the tab.
Yet even in the Democratically controlled Senate, liberals realize that exposing their corporate patrons to more tax liability will go over like a dieting booth at the county fair. Leahy's bill never made it out of committee.
2. Delaware, the Cayman Islands of America. Just outside of Philadelphia sits a tax haven so egregious the Cayman Islands complain about us. It's called Delaware, a tiny state that allows American companies to set up fake headquarters so they can avoid taxes in their own states.
Delaware does it by asking fewer questions than a needle exchange. Like the Caymans, it doesn't tax assets like royalties, leases, trademarks, and copyrights. So U.S. companies create shell firms in Delaware, then "sell" their intellectual property to them. By leasing their own inventions from these fake companies, corporations have dodged $9.5 billion in state taxes over the past decade.
The trailblazer for such schemes was WorldCom, the famed telecommunications company that imploded in 2002 after being caught cooking its books. In one scam, WorldCom pretended to pay its Delaware shell company $20 billion in royalties for the questionable asset of "management foresight." Though there were no managers in Delaware, and no real money changed hands, WorldCom was able to reduce its state taxes by hundreds of millions.
Such scheming is so commonplace that Delaware is home to more corporations (945,326) than it is people (897,934). Even the patron saint of tax evasion, the Cayman Islands, sniffs over the state's corrupt practices.
"There should be a level playing field and Delaware should have to comply with the same standards as the Caymans," says Anthony Travers, chairman of the Cayman Islands Stock Exchange.
Johnson likens the Delaware strategy to one first professed by Clyde Barrow, the Depression-era bank robber.
"Near the end of Bonnie and Clyde, they're lying around in bed after making out and Bonnie says, 'Anything you'd do different?' And Clyde says, 'I think we shoulda lived in one state and done our bank robbery in another state,'" says the professor.
"The answer is, if you're a corporation, that's exactly what you do."
1. The corporate blackmail exemption. In 2006, Starbucks chieftain Howard Schultz sold the Seattle Supersonics to Clay Bennett for $350 million — with the "understanding" he would keep the team in Seattle.
Almost immediately, Bennett — who made his money by marrying the daughter of billionaire Edward Gaylord, owner of Country Music Television — asked Seattle to pony up $300 million for a new arena. The city wasn't eager, since it had already spent $75 million renovating the existing arena a decade before.
Bennett decided to blackmail Seattle, using Oklahoma City as leverage. Oklahoma had no major sports team of its own. So its otherwise conservative legislature offered Bennett a huge welfare package: $120 million for arena renovations and a new practice facility.
Seattle balked. Oklahoma had a new basketball team.
Yet according to the tax code, not all entitlements are creating equal. While a laid-off electrician still pays taxes on his $500-a-week unemployment check, Bennett didn't pay a dime on his $120 million welfare bonanza.
This exemption only sweetens corporate incentive to blackmail states and cities whenever they consider moving. Take Toyota.
In 2002, it decided to build an assembly plant for its Tundra pickup, taking advantage of cheap labor in the South. Just like Oklahoma, otherwise anti-entitlement states like Alabama, Arkansas, Mississippi, Tennessee, and Texas stumbled over each other with monstrous welfare packages.
Texas ultimately won by offering $227 million in subsidies. The state had purchased the right to host 2,000 workers at a plant in San Antonio — at a cost of $110,000 per job.
Yet for America as a whole, the deal was a spectacular loss.
It wasn't long before Toyota closed a similar plant in California, killing 4,700 jobs and shifting production to San Antonio and Canada.
The net result: Texas taxpayers forked over $227 million so America could lose 2,700 jobs. The only winner was the Japanese automaker, which walked away with a tax-free welfare package.
Still, Congress continues to offer blackmailers this lucrative break, though it provides no benefit to the country.
"There isn't one bit of improvement whether the Toyota plant goes north or south of the Tennessee-Alabama border," says Johnson. "Yet they will make money off the fact that there is a line between them. It's just nonsense."
Unfortunately, nonsense is the calling card of the tax code. Surely, even Mitt Romney can see that.
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.