Nations pulling together to fight multinational corporation freeloaders

Last month in Great Britton the collection of the world’s top eight economic nations (the G8) decided to get tough on multinational corporations evading paying taxes.  Last week the top 20 economic nations (the G-20) endorsed the outline of a plan to do the same thing. 

The full plan by the Organization for Economic Cooperation and Development (O.E.C.D.) will be presented to the G-20 in St. Petersburg, Russia, in September.  In its preliminary report the O.E.C. D made it quite clear that multinational corporations have been gaming the tax codes of countries (mostly in legal ways) to shift tax burdens to small businesses and individuals. 

However, even if the G-20 supports the final report, it will still be up to each individual country to pass the needed legislation to make the plan work.

Two years ago I joined the U.S. Senate’s leading advocate on this issue, Carl Levin, in a D.C. press conference to roll out the Stop Tax Haven Abuse Act.  Unfortunately, that effort was unsuccessful but Senator Levin is our leader and is quoted as saying in recognition of the G8 and G-20 news that there is “growing global demand for reining in corporate offshore tax abuses.”  

As Senator Levin approaches his retirement from the Senate, Congress joining the rest of the world’s big economic nations in taking significant steps to make multination corporations pay their global taxes would be a great tribute to his public service.  And I, the South Carolina Small Business Chamber, American Sustainable Business Council and all the other truly small business organizations stand ready to make that recognition a reality.

Oppose amnesty for tax-avoiding and tax evading corporations

You pay your taxes.  Your business pays its taxes.  Why do we want to let big corporations that don’t pay their taxes off the hook? 

Small businesses should not be subsidizing government services (ex. courts, infrastructure, defense, education) that multinational corporations use but don’t want to pay for.  But that is exactly the impact of the Partnership to Build America Act (H.R. 2084) now in the U.S. House of Representatives.  The better name would be Tax Amnesty for Multinational Corporations Act.

The bill would grant two big rewards to companies that have invested heavily in lobbyists and accountants to create and exploit lucrative offshore tax loopholes. The first would be tax amnesty on nearly $2 trillion in profits that they’ve squirreled away offshore and the second will be that they will have the ability to control the board of the Infrastructure Bank the bill would create.

We know from past experience that corporate tax holidays don’t restore America’s tax base; they erode it further. 

Equally as important, we need the money our nation spends on infrastructure to be controlled by our elected officials and public servants whom we can hold accountable, not by the very same multinational corporations that have been gaming the tax system and denying our government the funds to adequately invest in infrastructure and many other unmet needs.

Call your House member now and tell them to vote no on H.R. 2084.  Tell them that you don’t support tax amnesty for big corporations.

Call your House member now at (202) 224-3121.



 

One BAD Apple

The recent news that Apple has played the tax laws of Ireland versus the U.S. to effectively avoid paying any corporate tax on tens of billions of income might be the proverbial straw that breaks the camel’s back regarding finding a solution to offshore tax haven abuse. 

All the rest of us are essentially subsidizing all the government services that Apple is using.  Our roads and bridges, courts, public education, even our military defense.

So exactly how do we force multinational corporations to pay their fair share of U.S. taxes even if we can’t get other countries to join us in this effort?

Harold Meyerson addresses this issue in an opinion editorial in The Washington Post.  Here are some excerpts.

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The Washington Post
May 28, 3013

Apple’s U.S. revenue should be taxed

By Harold Meyerson,

The open secret of many global corporations’ success — and occasionally, downfall — is to fall between the cracks. Apple, which is based in Cupertino, Calif., created an Irish subsidiary with no employees, into which it funneled roughly $30 billion between 2009 and 2012 on which neither Ireland nor the United States levied taxes.…

The legal evasion of corporate taxes by shifting income to low-tax climes isn’t only a U.S. problem. Low-tax trolling is on the agenda of the Group of Eight leaders’ meeting next month. But absent a global sovereign, there will always be countries with tax rates lower than their neighbors’ and companies seeking to take advantage of that disparity. Reducing the nominal tax rate on corporate profits in the United States to 25 percent, or 15 percent, from the current 35 percent won’t deter some future Apple from shifting profits to some future Ireland if the tax rate there is zero.

So, what to do? …taxing corporations on their revenue rather than their profits. If Apple gets 60 percent of its revenue from sales in the United States, Apple should pay U.S. taxes on that revenue. Let France collect taxes from Apple on its sales in France, China on its sales in China and so forth. Taking production and the location of corporate headquarters out of the equation would end the noxious practices of placing factories where the taxes are lowest and creating dummy subsidiaries to funnel profits through low-tax countries. Companies would still roam the globe in search of the cheapest labor, though a better Congress might one day seek to reward businesses for keeping and generating high-value-added jobs in the United States.…

Ultimately, what’s needed are global standards for taxes, labor and regulation. Until they exist, let’s do what we can to stop game-playing that benefits only the rich.

Small business opposes multinational corporations' tax avoidance

The Hill's Congress Blog
April 9, 2013

 

By Frank Knapp, Jr., vice chairman, American Sustainable Business Council

In our highly partisan environment there seems to be very few issues that Republicans, Independents and Democrats agree on. This partisanship is easily seen in Congress but is also alive with voters across the country. Small business owners are often no different than their customers in demonstrating divergent opinions on issues depending on their political preferences.

So when we find an issue on which small business owners agree, regardless of partisan leanings, we should take notice. And when that agreement centers on one of them most contentious matters that Congress will soon be addressing, our elected officials in Washington need to pay close attention. Such is the case involving federal tax fairness between small business and large, multinational corporations.

Small business owners are keenly aware that multinational corporations are legally escaping paying much, and often all, of the highly publicized 35 percent U.S. corporate income tax rate. In a poll released early last year by the American Sustainable Business Council (ASBC) and others 80 percent of the small business owners surveyed said that U.S. multinational corporations using accounting loopholes to shift their U.S. profits to offshore tax havens is a problem. Seventy-five percent said that big corporations using tax loopholes harms their own small business.

Accounts of giant businesses like Boeing, General Electric, Pfizer, Microsoft and Honeywell International using offshore tax loopholes to dramatically lower their taxes – often to zero -- are all too common. U.S. Public Interest Research Group just released report showing that each of America’s small businesses on average picks up the tab for $3,067 to cover the costs of tax avoidance by U.S multinational corporations playing the offshore profit-shifting game.

It is clear to small business owners that the ability of these large corporations to minimize their tax liability through offshore tax loopholes is contributing to our nation’s budget problems and is harmful to the small business community. This awareness of multinationals shirking their tax responsibility has resulted in a bipartisan small-business owner consensus on the need of large, multinational corporations to pay their fair share of taxes.

Last month ASBC and the Main Street Alliance (MSA) commissioned a scientific telephone survey of over 500 small businesses across the country. As national business organizations representing small and medium size companies, both ASBC and MSA have advocated for equitable taxation on big business profits to invest in the country’s infrastructure and address the national debt.

Here are some of the overwhelmingly bipartisan consensus results of that ASBC/MSA small-business owner poll just released.

• More than three quarters of small business owners support closing overseas tax loopholes with a unitary combined reporting system:
 75 percent or more of Republican, independent and Democratic small business owners support this approach, which is successfully used by states to stop corporations from shifting the location of profits to avoid taxes.

• More than four out of five small business owners oppose a proposal to institute a territorial tax system (a system that would eliminate U.S. taxes on profits made or shifted offshore):
85 percent of small business owners oppose a proposal for a territorial tax system. Across party lines, at least 67 percent strongly oppose the proposal.

• Small business owners support ending deferral of taxes on foreign profits and requiring US corporations to pay income taxes on income earned overseas:
When asked if foreign earnings of U.S. corporations should be taxed after given credit for foreign taxes paid, 64 percent of small business owners expressed support. Within each party affiliation, at least 62 percent, expressed support.

These results should send a clear signal to Congress and the President from the country’s small business owners. The priority for reforming our nation’s tax code is to stop multinational corporations from using offshore tax havens to avoid paying their fair share of taxes. And these elected leaders are also put on notice to not support any proposal for a territorial tax system for multinational corporations that would lock in what small business owners of all political persuasions view as completely wrong and unfair.

Knapp is vice chairman of the American Sustainable Business Council and president and CEO of the South Carolina Small Business Chamber of Commerce.

Read more: http://thehill.com/blogs/congress-blog/economy-a-budget/292645-small-business-opposes-multinational-corporations-tax-avoidance#ixzz2PznClNww

Déjà vu all over again…with a bad twist

Yesterday President Obama reiterated his position that he supports extending the Bush-era tax cuts for the lower 98% of all taxpayers for another year.  Of course, that also means that he supports allowing those same tax cuts for the top 2% of tax payers to revert back to the Clinton-era levels (you remember the 90’s when the economy was soaring and we actually had a budget surplus)—a position shared by most Americans.

Of course the President’s GOP opponents argue that all the Bush-era tax cuts should be extended because to do otherwise would cause the wealthiest to stop creating jobs. 

Sound familiar?  It should.  We’ve been having this debate since 2010 when all the tax cuts were set to end.  The South Carolina Small Business Chamber, the American Sustainable Business Council, Business for Shared Prosperity, the U.S. Women’s Chamber of Commerce and other business groups support allowing the tax cuts for the upper 2% to expire and to use the new revenue for deficit reduction and investment in the nation’s infrastructure, first responders and teachers.

I wrote about this issue in The Hill once in 2010 and again in 2011.  The point is pretty simple.  Very few small business owners (less than 3%) fall into the upper 2% tax brackets and many that do have some business income are K Street lobbyists, hedge fund managers, high-powered consultants, Wall Street bond traders and the wealthiest Americans.  They are not your Main Street small business people.

Plus, businesses do not hire workers based on the business-owners income tax rate.  Businesses hire workers when the demand is there for products and services. 

But here is the new twist to this old debate. 

The traditional line against the tax rates going up for the wealthy is that it would hurt the small business job creators.  This argument recognized that small businesses create most new jobs but distorts the reality of the income of small business owners.  As indicated above, very few have incomes that would cause them to see a tax increase if the Bush-era tax credits on the top 2 tax brackets increased.

But yesterday in a radio interview, Presidential candidate Mitt Romney said, “What the president is proposing is therefore a massive tax increase on job creators and on small business.” 

AND???  Is Mr. Romney now making a distinction between “job creators” and “small businesses”? 

I thought maybe he simply misspoke but Romney spokeswoman Andrea Saul also made the distinction yesterday.  “The president’s latest bad idea is to raise taxes on families, job creators and small businesses,” she is quoted as saying.

This is apparently now the official position of the Romney campaign.  Small businesses are now not to be recognized as the same as job creators. 

Why is this important?  Because one of the few things small business has going for it in government is the deserved reputation as job creators.  But even with that we still don’t get the respect we deserve from government which at all levels heaps attention and incentives on big business while giving crumbs to small business.

If there is now an official effort to decouple job creator status from small businesses, we are in deep trouble.  The billionaires and multinational corporations that are trying to buy this election to totally control our economy and government will have driven the final stake into our hearts.

Poll: Small Business Owners Say Big Businesses, Millionaires Not Paying Fair Share of Taxes

90 percent of small business owners in nationwide poll say big corporations use loopholes to avoid taxes that small businesses have to pay; majority support increasing taxes on millionaires and letting high-end tax cuts expire

Washington, DC – Small business owners see corporate tax loopholes and accounting gimmicks used to shift U.S. profits offshore to avoid taxes as serious problems, according to an independent nationwide opinion poll released today. Small business owners think big corporations and the wealthy don’t pay their fair share of taxes, the poll shows. They support increasing taxes on millionaire incomes, letting high-end tax cuts expire, and closing the carried interest loophole that gives big tax breaks to hedge fund managers.

These are among the key findings summarized below of a scientific nationwide survey of small business owners released by the American Sustainable Business Council, Main Street Alliance and Small Business Majority. Click here to read the report.

“I’ve been in business 32 years, and I’m appalled at how big corporations and millionaires have shrunk their taxes,” said Lew Prince, managing partner of Vintage Vinyl, an independent music store in St. Louis, MO. “Ingrates like Amazon wouldn’t even exist without the Internet, which grew out of government research. The least that big corporations and their executives could do is pay their fair share for the roads, ports, education, research, public safety and everything else that tax dollars buy.”

“When big corporations like GE use loopholes and tax havens to avoid paying taxes, they’re starving our country of the revenues we need to invest in our communities and our future,” said Amanda Harrow, director of the Montana Small Business Alliance, a statewide network of small businesses. “Small business owners know that to build vibrant local economies we have to invest in education, infrastructure and building a healthy customer base. When big corporations that benefit from these essential investments don't do their part to support them, they’re jeopardizing our future. That’s unacceptable.”

“We need a Buffett Rule for wealthy individuals and a GE Rule for corporations,” said Scott Klinger, director of tax policy for Business for Shared Prosperity, a partner in the American Sustainable Business Council. “Warren Buffett spotlighted the madness of a tax code that lets him pay a lower rate than his secretary. Likewise, U.S. multinational corporations who shift U.S. profits offshore to avoid taxes shouldn’t be rewarded with a tax rate below Main Street employers.”

“Small businesses are the backbone of the economy, yet they feel the playing field is tilted in big businesses' favor and small firms are at a disadvantage when it comes to taxes and corporate loopholes,” said John Arensmeyer, founder and CEO of Small Business Majority. “Our economy needs to work for everyone. Policymakers need to listen to small businesses and level the economic playing field. If they do, we will all benefit from what small businesses can offer.”

Key findings from the survey include:

· Nine out of ten small business owners say big corporations use loopholes to avoid taxes that small businesses have to pay: 92 percent say big corporations’ use of such loopholes is a problem. Three-quarters of owners say their small business is harmed when loopholes allow big corporations to avoid taxes.

· Nine out of ten small business owners say that U.S. multinational corporations’ use of accounting loopholes to shift their U.S. profits to their offshore subsidiaries to avoid taxes is a problem: 91 percent agree it is a problem, with 55 percent saying it’s a very serious problem. When asked what would do the most to create jobs, small business owners chose eliminating incentives to move jobs overseas.

· Small business owners say big corporations are not paying their fair share of taxes: 67 percent believe big corporations pay less than their fair share. An even bigger majority, 73 percent, says multinational corporations pay less than their fair share.

· Small business owners say millionaires pay less than their fair share in taxes: 58 percent say households whose annual income exceeds $1 million pay less than their fair share.

· Small business owners support a higher tax rate for individuals earning more than $1 million: 57 percent agree that individuals earning more than $1 million a year should pay a higher tax rate on the income over $1 million.

· Small business owners want to eliminate the “carried interest” loophole that gives hedge fund managers a big break on their taxes: 81 percent favor hedge fund managers paying taxes at the ordinary income tax rate, which currently tops out at 35 percent, rather than the 15 percent capital gains rate they pay now.

· Small business owners support ending upper-income tax cuts: 51 percent say Congress should let tax cuts on taxable household income over $250,000 a year expire (only 40 percent believe they should be extended).

· Respondents in this scientific national survey were politically diverse, with a majority Republican or independent-leaning Republican: 50 percent identified as Republican (27 percent) or independent-leaning Republican (23 percent); 32 percent as Democrat (14 percent) or independent-leaning Democratic (18 percent); and 15 percent as independent.

For more information on these poll findings, visit:

http://www.asbcouncil.org/uploads/Taxes_Poll_Report_FINAL.pdf

http://mainstreetalliance.org/5535/poll-taxes/

http://www.smallbusinessmajority.org/small-business-research/downloads/020612_Taxes_Poll_Report.pdf

Poll results reported in this statement represent findings from a scientific national survey of 500 small business owners, commissioned by the American Sustainable Business Council, Main Street Alliance and Small Business Majority, and conducted by Lake Research Partners. The nationwide Internet survey was conducted between December 8, 2011, and January 4, 2012. It has a margin of error of +/- 4.4%.

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The American Sustainable Business Council is a powerful coalition of business networks representing over 100,000 companies and 200,000 business leaders. ASBC advocates for public policies that meet the realities of the 21st century global economy. www.asbcouncil.org

The Main Street Alliance is a national network of state-based small business coalitions. MSA creates opportunities for small business owners to speak for themselves on issues that impact their businesses and local economies. www.mainstreetalliance.org

Small Business Majority is a national nonpartisan small business advocacy organization, founded and run by small business owners, and focused on solving the biggest problems facing America’s 28 million small businesses. We conduct extensive opinion and economic research and work with small business owners, policy experts and elected officials nationwide to bring small business voices to the public policy table. www.smallbusinessmajority.org

Multinationals aren't here to help

“We don’t have an obligation to solve America’s problems.” 

Remember this quote from an Apple executive as reported by Charles Duhigg and Keith Bradsher.  It appeared in the first of a two part story that will surely win the two New York Times journalists deserved recognition for exposing Apple’s decidedly un-American manufacturing standards in China.

Remember this quote the next time you hear Apple, which is sitting on $98 billion in cash on hand, and other multinational corporations offer to help the American economy if we only lower their corporate taxes and let them bring home overseas profits with little taxation so they can hire workers. 

Remember that quote the next time Apple and their ilk lobby for more trade deals with other countries to create jobs here at home like we did with China in 2001 (we’ve lost 6 million manufacturing jobs since then). 

Remember that quote when you hear Apple and their big business elite or one of their organizations like the U.S. Chamber telling the American people that they know what is best for our country.

Remember that the real motive of Apple and other multinational corporations is not to solve America’s problems.  That’s because they are not American businesses any longer—they’re “citizens of the world” Thomas Friedman correctly points out in his column yesterday.

These multinationals have no allegiance to any country.  They have only one goal—to make as much profit for their executives and shareholders as possible by increasing production and lowering costs.  The slave-labor like conditions and slave-labor wages at Apple’s Chinese manufacturing plants are detailed in the New York Time’s stories.

Likewise, America should have no allegiance to these multinationals.  When Steven Jobs told President Obama last February that the iPhone jobs aren’t coming back to America, the President should have told him that we were going to start getting tough on trade enforcement.  No longer should we allow other countries to produce cheaper products due to little concern for their workers and environment.  “Meet our standards or pay tariffs” the President should have told Mr. Jobs. 

Almost a year after that meeting with Mr. Jobs, the President did call on tougher trade enforcement in his State of the Union.  Let’s hope he means it and give him our support.

Real job creators getting it done

The lead story for the 7 AM East coast viewers of the Today Show (NBC) this morning was a report by Carl Quintanilla of CNBC.  Quintanilla’s gave an analysis of the good economic news that unemployment in December was down 11% from the previous year and the four week average unemployment rate is at the lowest level since June 2008.

“It’s not corporate America coming to the rescue with new jobs.  It’s mostly small and medium size businesses…,” said Quintanilla.

Then after 8 AM this morning the Labor Department announced that 200,000 new jobs had been added in December and the jobless rate dropped to 8.5%, the lowest in three year. 

While big business and multinational corporations now have numerous organizations in Washington trying to convince Congress that they can’t create jobs unless corporate taxes  are dramatically reduced and profits hidden offshore are allowed to come back home at miniscule tax rates, small and medium size businesses are boosting the economy.

The big business organizations like Tax Reform Coalition, RATE Coalition, WIN America Campaign and U.S. Chamber of Commerce and their members are pouring money into campaign contributions, lobbyists and public relations that they could be using to create jobs. 

Small and medium size businesses, on the other hand, are using their money to hire more workers and increase production. 

Congress should take note.  The real job creators are doing just that.  Corporate America just wants to make more profit without making the investment.

Repatriation fraud exposed

The high drama is back in Washington as this Friday is the deadline for passage of a spending bill that will keep the doors open on the federal government.  Getting that done is intricately married to passing legislation to extend the payroll tax cut for 160 million working Americans and also extending federal unemployment benefits.

Fortunately, one very bad idea apparently has been set aside as part of these discussions—allowing multinational corporations to repatriate (bring offshore profits back into the country) at a ridiculously low tax rate in the hopes that this will stimulate the economy.  We tried this in 2004 and it didn’t work then.

The wheels have been coming off this phony “economic stimulus” proposal partially because some influential GOP members of Congress think it is a better idea to address corporate tax rates in general, not piecemeal. 

But the other reason for the failure of the repatriation nonsense is that the truth is now coming out about these so-called offshore profits.

Back in July I participated in a press conference with Senator Carl Levin of Michigan in his Senate office.  At that time we laid out the rational for why repatriation was not good for the people, small businesses and the economy.

Yesterday, Senator Levin released a new report exposing the repatriation fraud that the multinational corporations like Google, Apple, Cisco and Microsoft have been selling. 

Some multinational corporations say they want to bring foreign funds back to America, but can do it only if they get a special tax break.  They claim their foreign funds are otherwise ‘trapped’ abroad, but new data show that is not true.  Many U.S. multinationals have already invested a large portion of their foreign funds right here in the United States, taking full advantage of the safety and security of the U.S. financial system to protect their money while paying no U.S. taxes on those funds to support the U.S. system.

Of the $1.4 trillion in offshore profits the multinational corporations have been dangling in front of us as the way to create jobs and boost the economy if we just slashed the tax rate to let them come home and be invested, about 46% of the money is already here….invested in our economy.  But it’s not being taxed because it is still considered offshore profit. 

So why are these multinational corporations willing to pay any tax at all on this money that they already have in the U.S.? 

The profits can’t be used by the corporations to give windfalls to their stockholders and executives unless it is officially repatriated.   They want to stimulate their own personal economies, not the country’s.

Regulatory reform good for multinationals, yet bad for you.

The Hill's Congress Blog

November 1, 2011

By Frank Knapp Jr

 

The Regulatory Accountability Act of 2011 (RAA), a bipartisan bill introduced in the House and Senate, portends to offer common sense rules to affect how Federal agencies analyze costs and benefits. The bill provides extensively detailed procedures for agencies in promulgating regulations that are projected to have a minimum effect of at least $100 million on the United States economy.

However, a thorough reading of the RAA leads to three conclusions. First, the bill will likely to dramatically drive up the cost of almost every rule-making process and budget of a federal agency. Second, federally elected officials will be stripped of their ability to responsibly lead our country. And third, the RAA is a highway to never-ending lawsuits by special interests against the federal government.

The RAA is designed to micromanage every federal agency in its efforts to create rules necessary to carry out legislation passed by Congress.

By doing so, it turns over 60 years of effective regulation promulgation under the Administration Procedures Act into a protracted process that will stretch the time needed for rule-making into decades. Federal agency budgets will need to be expanded by hundreds of billions of dollars to comply with the RAA and perform their usual functions of protecting the public and small businesses from unsafe products and practices.

Congressional and presidential governance will be replaced by bureaucratic decisions designed to appease special interests. Elected leaders will be turned into figureheads whose every effort to exercise the will of the voters will be thwarted by the will of government bureaucrats, special interests and the courts.

Finally, the legislation is a corporate lobbyist dream. It appears to have been written by corporate attorneys for corporate attorneys.

Every aspect of the RAA is geared toward encouraging special interests to legally challenge every regulation of an agency. Even frivolous lawsuits are protected under the bill because the RAA defines as "substantial evidence" for a lawsuit to be anything the special interest thinks is "reasonable."

The 32-page RAA mentions judicial review, litigation, the court and other lawsuit terminology 18 times. The bill even includes a provision guaranteeing "immediate judicial review" for any special interest on every aspect of the prescribed rule-making process. Even the decision by an agency that a rule will not meet the minimum $100 million threshold can be challenged in court, making the developing of any rule subject to the extensive and expensive rule-making process prescribed in the RAA.

There is no way to describe the RAA in any other simpler terms than to call it what it is—a budget-busting, anti-democracy, Corporate Attorneys Full Employment Act.

It is no wonder then that supporters of the RAA are primarily U.S.-based multinational corporations. Increasing the cost of government for taxpayers is not a concern to these corporations that use offshore tax havens and other deceptive accounting practices to avoid paying their fair share of U.S. taxes. If federal agency budgets must be increased because of the RAA, it won't be the multinationals footing the bill.

The multinationals have no allegiance to government and democracy. Their shareholders and corporate executives are the only flags they salute. A diminishing of our democratic governance only serves to give the multinationals more power.

The only authorities these multinationals recognize are the courts. With their enormous wealth, multinationals eagerly pay expensive corporate attorneys to delay, change or kill any government regulation that stands in their way of profit. This means that the RAA threatens every American citizen's health and safety.

In regard to the No. 1 issue today, jobs(other than corporate attorney jobs), the RAA will create none in the private sector. Instead, it endangers the well-regulated marketplace essential in establishing fair competition between small, mid-size and big business. The RAA will allow big business to push smaller competitors out of the marketplace, thus killing jobs.

The RAA is not just bad legislation. It is extremist legislation designed to protect the very entities from which the rest of us need protection-multinational corporations.

Knapp is vice-chair of the American Sustainable Business Council and president of the South Carolina Small Business Chamber of Commerce.

Source:
http://thehill.com/blogs/congress-blog/judicial/191015-regulatory-reform-good-for-multinationals-yet-bad-for-you

"Gang of Six" tax plan--sacrifice for all but multinationals

OK. I admit that I got my hopes up upon hearing that U.S. Senate Democrats and Republicans were talking nice about the Gang of Six deficit reduction outline that included revenue increases as well as budget cuts.

But as they say—the devil is in the details. And the details in the Gang of Six proposal are sketchy to say the least.

But here is what we can garner from what has been made available to the public.

If you like U.S.-based multinational corporations using offshore tax havens and tax loopholes to avoid paying taxes, then you’ll like the Gang’s plan.

If you like these multinationals shipping U.S. jobs overseas, then you’ll like the Gang’s plan.

If you want to keep the inequity of our tax system that favors corporate giants and the wealthiest in our country, then you’ll like the Gang’s plan.

The Gang’s plan projects to increase federal government revenues by $1 trillion over 10 years. But instead of asking those not paying their fair share of taxes ($1 trillion over the next decade is the projected amount of taxes not being paid due to corporate tax havens and loopholes); the proposal suggests reducing tax deductions for employers offering health insurance, charitable giving, home mortgages and other middle class breaks.

That short term lifting of the debt ceiling combined with some budget cutting all of the sudden doesn’t look so bad. At least then we’ll still have a chance for common sense revenue enhancers that treat small businesses and hard-working Americans fairly.

Whose Stimulus?

The below is an editorial from the New York Times.
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The NY Times
June 26, 2011

Whose Stimulus?

Big businesses are telling Washington that they are willing to do their bit for the economy — if the price is right. Multinational companies say they could repatriate hundreds of billions in foreign profits and pump them into domestic investment and hiring, but only if Congress and the White House agree to cut the tax rate on those profits to 5.25 percent from 35 percent. They call their plan “the next stimulus.” Sounds more like extortion.

In the last five years American businesses have kept abroad more than $1 trillion worth of foreign earnings, according to government data. An article by David Kocieniewski in The Times last week noted that Microsoft has $29 billion offshore, Google has $17 billion and Apple has $12 billion.

The Obama administration should not give in to such corporate coercion. The last time big businesses got such a “tax holiday,” in 2005, companies spent most of the money rewarding their shareholders with stock buybacks and dividends, not in hiring.

Truth is, businesses’ decisions to invest or increase employment depend on the state of the economy. If consumer demand is depressed, as it continues to be, corporate chieftains see no business logic in raising production. In the second quarter of 2010, when expectations of recovery were rosier, nonresidential investment jumped 17.2 percent. In the first quarter of this year it grew only 2 percent.

Bringing more money home at lower tax rates isn’t going to change that thinking. What these businesses don’t say is that they are already awash in cash. According to Federal Reserve data, companies in the United States have $2 trillion stashed in bank accounts, Treasury securities and other investment-ready assets. And this excludes cash held abroad by their foreign subsidiaries to avoid taxes.

Businesses will always want a tax cut. And they will always justify it as good for hiring and investing, whether or not it is. We remain perplexed by the Obama administration’s decision to consider businesses’ contention that cutting employers’ contributions to payroll taxes will lead to more jobs. It probably won’t — especially if the break is not specifically tied to new hiring.

The faltering economy needs real stimulus, like extending the payroll tax cut for workers until the end of next year. That would put money directly in the pockets of American workers and stimulate consumption. Investing in infrastructure would also help.

Beyond pleasing shareholders, there is one other guaranteed result of giving employers a big tax break on their foreign profits: less cash to finance government programs or pay down the deficit. According to Congress’s Joint Committee on Taxation, the proposed cut would cost $79 billion over 10 years.

Stop the multinational corporation tax break

Message from the American Sustainable Business Council:

Why Should Apple, Kodak and Pfizer Get Another Giant Tax Break?

A coalition of multinational corporations – including many household names – is pushing for a massive tax holiday on profits they’ve parked overseas.

George Bush gave out a similar tax holiday to U.S. multinationals in 2004.

Back then, the money became a huge windfall to corporate owners and shareholders – including many CEOs – in the form of stock buybacks and dividends. And then U.S. multinationals eliminated more American jobs and shifted even more income and investment to offshore tax havens.

This time, it is estimated to cost the U.S. Treasury $80 billion. That’s $80 billion that could be invested in services and infrastructure that all businesses depend on.

Numerous business organizations have sent a letter to Congress opposing the proposed tax holiday for multinational companies and calling for closing offshore tax haven abuse. Read the letter here. Then contact your Congressman to encourage him or her to tell multinational corporations to pay their fair share of U.S. taxes.

Talking tax haven abuse at the U.S. Capitol

About 15 Congressional staff and 15 others attended a briefing yesterday at the U.S. Capitol. They were there to learn more about how tax haven abuse by U.S. based multinational corporations is harming our country. The event was sponsored by the FACT (Financial Accountability and Corporate Transparency) coalition.
 

I was invited to speak to the Congressional staff about the negative impact on small businesses of the big corporations avoiding paying U.S. taxes. More importantly, those attending heard from Nick Shaxson, whose book Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens was released this week in this country. The other more impressive speaker was Rebecca Wilkins, Senior Counsel on Federal Tax Policy at Citizens for Tax Justice, who spoke on remedies to the tax haven problem.

Chuck Collins (Institute for Policy Studies), Nick Shaxson
(author of "Treasure Islands", Rebecca Wilkins (Citizens for
     Tax Justice) and Frank Knapp at the front steps of the U.S. Capitol

For everyone else who wasn’t able to be at the briefing, below were my prepared remarks.

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You might be wondering why a guy representing small businesses in South Carolina is here in such a prestigious building and with such prestigious company.

South Carolinians have a long tradition of concern with being treated fairly. For those of you who know your Revolutionary War history, tax fairness was the issue. A large percentage of the battles were fought in the Palmetto state and it was in the swamps and fields of South Carolina that the war turned in the favor of the colonies.

One hundred and fifty years ago this week, South Carolinians ignited a Civil War because they didn’t think they were being treated fairly by the federal government.

Eleven years ago I and other founded the South Carolina Small Business Chamber of Commerce and one of the reasons was tax unfairness between big and small businesses.

In the past two weeks, my organization has been fighting another fairness issue. Amazon.com insists that they won’t build a distribution center in our state if it isn’t exempted from collecting sales tax on sales to customers in the state.

We oppose this exemption because it would create an unfair competitive advantage for Amazon over our brick-and-mortar and on-line retailers all across the state.

So here we are at tax season and again the issue is tax fairness.

The use of tax havens by U.S. based multinational corporations is clearly unfair to small businesses in South Carolina and across the country.

Multinationals avoiding paying U.S. taxes means that the small CPA firm of the Chairman Emeritus of our chamber competes with H&R Block that pays an effective tax rate of only 12.5 percent.

Multinational corporations avoiding paying U.S. taxes means that another founding board member who started a community bank has to compete against bank of America that paid no U.S. taxes in 2009 and 2010 as well as against Wells Fargo that paid less than zero U.S. taxes in those years because of a tax rebate.

Multinational corporations avoiding paying U.S. taxes means that one of our current board members, who is developing health care information software must compete against GE that, as we know, paid no U.S. taxes last year.

The small businesses that we want to create and are creating the jobs this economy needs should not be competitively disadvantaged to multinational corporations by our own tax law that are clearly unfair.

Beyond the competitive unfairness, small business should not be paying more in taxes for all the services we need from the federal government because multinational corporations are avoiding paying U.S. taxes.

Small business owners might not enjoy paying taxes, but they are very patriotic and are big supporters of fair competition.

Offshoring profits to tax havens is neither patriotic nor competitively fair. More and more small businesses are coming to realize this situation and are raising their voices to call for change.

Tax day comes for us but not for them

When you’re mailing in your tax returns on Monday, they’ll be plenty of big multinational corporations laughing at you.

--Boeing Corporation from 2008 to 2010 had total pre-tax profits of $9.7 billion but did not pay a dime of its profits in federal taxes.

--Between 2006 and 2010, General Electric told their shareholders they had $26.3 billion in profits, but paid no U.S. taxes.

--Citigroup has paid no taxes for the last four years.

This Thursday I will be in Washington to speak to a Congressional staff briefing on tax haven abuse that enables corporations like Boeing, General Electric and Citigroup to dramatically lesson or even eliminate their corporate tax liability by primarily off-shoring profits. As a result, the rest of us pay more for the services of our federal government. Plus, these multinational corporation freeloaders have an unfair competitive advantage over American businesses that pay their taxes.

Below is some information from Business & Investors Against Tax Haven Abuse.

KEY POINTS:

Corporate Tax Dodgers Create an Unlevel Playing Field with Domestic U.S. Businesses. Responsible businesses have to compete unfairly against multinational companies that use offshore tax havens. A domestic U.S. business that pays its taxes is at an unfair disadvantage when multi-corporations game the system and shift profits to low or no tax havens.

Corporate Tax Dodging Shifts Money onto Responsible Tax Payers. The bills have to be paid –and no one should be able to opt out simply because they are politically connected and big. It undermines our system of government when some corporations pay little or nothing toward the range of public goods that includes aircraft carriers, shelters for the homeless, and schools for our kids.


We all must pay our fair share to maintain the public infrastructure for healthy business activity. Businesses thrive in healthy communities with adequate public services and infrastructure. All companies should pay their fair share of taxes for infrastructure, public services and the investments that have historically expanded opportunity in the US including K-12 and higher education.

Our businesses and communities will be hurt by tax cut austerity at local, state and federal level. States are facing the worst budget gaps in living memory. The Center on Budget and Policy Priorities estimates that the combined budget gaps in all U.S. states is over $102 billion. Closing overseas tax havens would generate an estimated $100 billion that could be used to reduce the worst of these cuts.

In the last 50 years, the gap between what corporations pay and the taxes paid by small business and individuals continues to widen. In 1961, small business owners and individuals paid twice as much in federal income taxes as large corporations. In 2011, small business owners and individuals are paying nearly five times in taxes what corporations pay. Between 1961 and 2011, taxes paid by small business owners and individuals rose 23-fold from $41 billion in 1961 to an expected $956 million in 2011. Over the same time period, large corporations saw their tax bill rise less than 10-fold, from $21 billion in 1961 to $198 billion expected in 2011.

Secrecy Undermines Healthy Business Environments. Tax havens are not only ways to reduce or eliminate taxes, but also a means for criminals and lawless corporations to circumvent the law, using secrecy as their primary tool. This is why the Tax Justice Network prefers to refer to tax havens as “secrecy jurisdictions.”

POLICY REMEDIES

No Corporate Tax Holiday for Offshore Profits. Multinational technology and drug companies are lobbying Congress to allow them to repatriate $1.2 trillion in profits they have parked offshore. They would like to pay 5.25 percent taxes on these profits, rather than the statutory rates.

Pass the “Stop Tax Haven Abuse” Act. This would address a variety of abuses (about to be reintroduced in the 112th Congress). $100 billion a year.

Ending Deferred Corporate Income Taxes. This would reduce the incentive for corporations to use tax havens and move jobs offshore. According to Citizens for Tax Justice, ending corporate tax deferral would raise at least $50 billion per year.

Country by Country Reporting. Require global corporations to report sales made, profits earned and taxes paid in every jurisdiction where an entity operates.

Automatic Exchange of Tax Data – through international tax cooperation among governments. Require governments to collect data from financial institutions on income, gains, and property paid to non-resident individuals, corporations and trusts. Mandate that data collected automatically be provided to the governments where nonresident entity is located.

Require Disclosure of Beneficial Ownership of all business entities, trusts, foundations and charities. Require this information be readily available on public record to facilitate effective due diligence; and explicitly require, and enforce, that financial institutions identify the ultimate beneficial owners or controllers of any company, trust or foundation seeking to open an account.

Walmart on steroids

If you, like everyone else, are tired of all the negative political ads, take solace in the fact that they’ll be gone next Wednesday.

But unfortunately, what will stay with us is an outright attack on our democracy. Our “government of the people, by the people and for the people,” thanks to the Citizens United Supreme Court decision, might now be better called “government of the corporation, by the corporation and for the corporation.”

And by “corporation,” I’m not talking small businesses. I'm talking about giant special interest, multinational companies that brought us these beauties:

Image: NyeGateway.com

• The Gulf oil disaster
• The financial crisis that led to the recession
• Skyrocketing health insurance premiums
• Jobs exported overseas
• Bloated military budgets to fight unnecessary wars

These corporations have been given the green light to spend all the money (actually their customers' money) they want to influence our elections, while not letting the voters know who is paying for the ads—most of which are negative—or being accountable for the truthfulness of the messages.

Total spending -- by candidates, political parties and special interests -- has topped $3.2 billion and is likely to hit $4 billion when reports detailing last-minute donations and spending are tallied, according to a study released Wednesday by the non-partisan Center for Responsive Politics. That would obliterate the record $2.85 billion spent in 2006, the last midterm elections. Read more….

For the small business owner who might think that these giant multinational companies have their best interest at heart, you’ve been suckered into voting against your future.

Think Walmart on steroids.

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Want to do something about it?

1. Vote this Tuesday, November 2
2. Join us for our next BuySC Micro-Conference, Wed., Nov. 10 (details below)
3. Shop local on Nov. 20, 2010, Happy Hardware Day!

The SC Small Business Chamber presents the next installment of our BuySC Micro-Conference series:

Keith Spiro: 5 Steps to Business Freedom
 

When: November 10th, 2010
Where: 701 Whaley, Olympia Room (2nd floor), 701 Whaley Street, Columbia, SC 29201

Time: 6pm - 8pm

Price: Free for paying SCSBCC members / $5 Basic Members /$10 for non-members.  Click here to register and buy your tickets now. 

Want to save $5? Become a BuySC member at the "free" level and your ticket is half price. Why? Because we're a non-profit, and we want to unite SC's small business community.

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