Screwed by corporate America
8 Apr, 2011 21:04
General Electric is one of America’s oldest corporations. It fuels the economy with innovation, with jobs and even with wind. But it turns out, not with taxes.
A New York Times investigation found that in 2010 GE reported worldwide profits of $14.2 billion, $5.1 billion of which came from its operations in the United States.But GE claimed a tax benefit of $3.2 billion dollars.According to GE’s website, the company pays what it owes under the law… and GE is right. Thanks to heavy lobbying, legislation passed allowing companies to keep much of their profits overseas, where tax rates are lower.And it’s not alone. Google also benefits from laws passed in Washington in which it keeps its money here in Ireland, near its Dublin Corporate office. While the corporate tax rate in the U.S. is 35 percent, it’s just 12.5 percent in Ireland. From there, Google sends profits to its Bermuda subsidiary – a mailing address- where the tax rate is 0 percent. It’s a practice Bloomberg news reporter Jesse Drucker said is common.“The question is does it make sense for a company that created intellectual property here in the US that has the majority of its employees in the US, is it sound tax policy to have the bulk of its profits overseas attributed to a mail box in Bermuda,” Drucker commented.It’s a question many are asking, especially in the midst of the economic crisis.Economists estimate the U.S. is losing between $60 and $90 billion in tax revenue.Still, corporations say the tax rate in the US should be lowered.“The argument is that it will enable them to spend more money in the economy but US companies are already sitting on a record pile of cash, almost 2 trillion dollars according to the Federal Reserve.”Jordan Estevao, Bank Accountability Campaign Director with National People’s Action , said lawmakers wrangling over the budgetare missing the point – that it’s not a budget crisis but a revenue crisis.“The fact of the matter is, governments on a state and federal are not raising enough revenue,” Estevao said.Members of his organization protests against what they see as corporate greed.“Bank of America in 2010 actually got a tax refund of 666 million dollars,” Estevao pointed out. “That’s on top of their 2009 refund of 3.5 billion dollars.”Don’t forget Bank of America was given billions in taxpayer dollars in the bailout.Corporations are now campaigning for a tax holiday like the one in 2004.It allowed corporations to bring back profits from abroad, at a tax rate of only 5.25 percent, resulting in a $265 billion cash injection. It was called the American Jobs Creation Act.“One of the most interesting examples coming out of that tax holiday was Hewlett P, which brought home $14.5 billion under the holiday.That same year it announced it was laying off 14,000 people,” Drucker said.Perhaps this was because most of the money was used to buy back shares of its company.“It’s not creating jobs,” said Estevao. “Helping these guys out is not creating jobs. It’s just lining their pockets.”As popular as it to speak begrudgingly of the government, many people forget that the government provides services that people use and enjoy on a daily basis, whether they realize it or not, things like road repair, firefighters and the sewer system.They are everyday services increasingly funded by those making the least, while companies making the most use the system to get around it.Nomi Prins, a senior fellow at Demos and the author of "It Takes a Pillage" explained major businesses game the entire US tax system to their benefit, while average Americans foot the bill.Many in Washington argue lower tax rates would spur job growth and push the businesses to hire more people and follow the rules without loopholes. Prins called this a myth.“Their percentage relative to anyone else is so low,” she said, explaining that they already pay very little. “There is too much of a gap in terms of what comes in.”Almost 80 percent of taxes which come in come from individuals, not companies, she explained. Wall Street has the power, but pays less into the bucket – and Wall Street is responsible for the crisis, and managed to get bailed out by the government, earn profits and still avoid taxes. Corporations on Wall Street win, while consumers on Main Street and America’s middle class lose out.