UPDATE
The New York Times in an editorial today slammed the idea of a “Tax Holiday” for corporations
See original article below editorial
NYT Oct 24
No Holiday
“Big business has clearly decided that the economic crisis is too important to waste. While Washington debates how to create jobs and cut the budget deficit, major corporations — read major campaign contributors — are pushing Congress for an enormous tax cut on corporate profits…….
These days, corporations are flush with $2 trillion in cash that is not being used for hiring. As long as the economy is weak and consumers aren’t spending, tax cuts will add to the cash pile, not create jobs.
… tax holidays encourage tax avoidance — as companies use accounting maneuvers to shift profits offshore and then wait for the next tax holiday before bringing the money back.”
SO will Congress listen?
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Trillion Dollar Giveaway
With GE in the headlines for not paying any U.S. taxes, you would think Congressmen would be falling over themselves coming up with a way to close corporate tax dodges. Well, one Congressman has gone the other way. He has proposed a trillion dollar government tax giveaway to big corporations. No, that is not a typo, a trillion not a billion, and yes, a congressman proposed just that.
Representative Brian Bilbray of San Diego, a former lobbyist, proposed a bill that would allow US corporations to dodge taxes on 1 trillion in profits. Forget the debate over the estate tax or a tax break for the super rich, this proposed giveaway has them all beat, hands down.
Here is the back story. Over the years, big corporations have found ways to cook their books by shifting profits overseas, thus reducing their taxes here in the U.S. For instance, Exxon Mobil paid no U.S. income tax in 2009 due to creative accounting.
Companies that are big enough can shift profits to countries such as Bermuda. Google cut its taxes by over $3 billion by moving most of its overseas income to Bermuda. Ask yourself how much business Google does in Bermuda? Seagate, the largest maker of hard disc drives, has its corporate headquarters in Grand Cayman. Grand Cayman has a zero corporate tax rate versus the U.S. corporate tax rate of 35%. So you think Seagate is there for the sun or the tax rate_?
In the old days, such schemes were favored by drug lords and were called money laundering.
Now back to Rep. Brian Bilbray. On March 11, Bilbray introduced a bill that would allow companies that have hidden their profits in offshore tax havens to repatriate ALL their profits back into the U.S. at a 0% tax rate. According to sources, the amount hidden offshore is estimated to be 1 trillion.
Bilbray wants to reward corporate money laundering. Most galling is that the bill is called the “Job Creation and Innovation Investment Act of 2011.” Who is he kidding ? The only jobs created will be for the lawyers and accountants who specialize in tax havens. The only innovation is the creativity and cynicism of the bill. How sad..
