Missing in all the partisan screaming and yelling about federal budget deficits and borrowing limits is any coherent talk about finding more tax revenue and a measure of equity for ordinary taxpayers.
Michigan Sen. Carl Levin has stepped up to the challenge. He introduced the Stop Tax Haven Abuse Act, Senate Bill 1533, to close offshore corporate tax loopholes.
Levin estimates the legislation would raise $220 billion over a decade. That is enough money to push back the across-the-board cuts of sequestration, he explained Wednesday in a telephone conference call.
As chair of the Senate Permanent Subcommittee on Investigations, Levin knows all the scams and devices of offshore corporate-tax avoidance and evasions.
- A couple thoughts on Fred Jackson, Kam Chancellor and the Seahawks
- Haggen sues Albertsons for $1 billion over big grocery deal
- After McKinley, it’s time to consider renaming Rainier
- Six sickened by E. coli linked to local food truck
- Huskies’ colors for opener are purple, green
Most Read Stories
Research found 30 U.S. companies with $160 billion in profits had paid no taxes during a three-year study period. More than $1.3 trillion stashed offshore can be traced to 20 companies.
Levin also knows that when all the ruses are employed the tax burden falls on domestic companies, small business and families.
The senator’s bill, which has three Democratic sponsors so far, would go after the process of transferring lucrative intellectual property to tax havens. He would end tax deductions for companies that move production and jobs offshore and receive deductions to build and operate the new plants though
none of the foreign profits are taxable.
Corporate profits get recycled and parked overseas, then repatriated via loans and other devices that make the eyes of accountants and lawyers glisten.
Another approach Levin does not favor is a territorial-tax system. It creates even more incentives to shift profits around the globe, avoid U.S. taxes and move more jobs overseas.
Americans for Tax Fairness cites a Congressional Research Report that American companies report earning 43 percent of overseas profits in five countries: Bermuda, Ireland, Luxembourg, the Netherlands and Switzerland — tax havens where the companies have scant employment or foreign investments.
This gravy train for American corporations with the resources and motives to engage these scams, aah, tax-avoidance opportunities, are skipping tax payments that support all manner of national priorities, including the education system they complain about.
Levin knows what needs to be done to return coherence and predictability to federal budgeting. He supports targeted budget cuts, reform of entitlement programs and more federal revenue.
Sequestration is a mindless process that whacks everything without review or discretion. For politicians elected to prepare and oversee budgets and spending, this is shamefully lazy.
The overseas-tax dodges used by corporations and wealthy individuals cost an ordinary taxpayer about $1,000 a year, and the average small business about $3,000, according to the U.S. Public Interest Research Group.
In February the British newspaper, The Economist, ran a special report on offshore finance that estimated the missing cash stashed out of sight by global companies and individuals at $20 trillion.
How does this all happen? With lots of help. One infamous haven for offshore accounts is the Ugland House in the Cayman Islands, a gloried mail drop for more than 18,000 corporate entities.
Microsoft, Hewlett-Packard and Apple draw lots of attention for their adroit use of tax havens. More than 200 small business owners on Wednesday posted an open letter to Microsoft. The Main Street Alliance of Washington wants the company “to end offshore tax dodging.”
Levin’s bill has an important role in the current fight over federal budgets and spending. Give ordinary taxpayers a break. Ensure others pay their fair share.
Where is the tea party? This is prime fodder for such protesters.
Complaining about federal corporate-tax rates is pointless because the effective rate is lower than whined about, and the biggest earners are not paying it.
Recovering avoided federal taxes is part of the legitimate work to cut the budget, reform entitlements, maintain the nation’s credit worthiness and provide a measure of equity.
Lance Dickie’s column appears regularly on editorial pages of The Times. His email address is email@example.com