Nothing says national debt like offshore tax shelters in places like the medieval town of Zug, Switzerland or Estonia 9%-16%, or Macedonia, 10% or Ireland, 12.5%. These places have low tax rates comparatively speaking, (the US corporate tax rate is 35%). All that is required to make offshore accounts lucrative is compliance with local laws and someone on-site to manage paperwork and testify to any stated ‘operations’ in said country. Transocean, (involved in the BP oil spill) moved to Zug two years ago. What we tend to forget is that the amount the federal treasury is out because of these shelters is around 18 billion a year.
According to 60 minutes laws have changed to try to plug loopholes, but other companies like Weatherford, Int’l have simply moved paperwork, then CEOs, CFOs, financial officers, and finally chunks of communications and even manufacturing overseas. CEO John Chambers says Cisco has around 40 billion trapped overseas waiting for tax relief so it can come home without losing it. In the past decade at least 100,000 jobs have relocated to the fringes of Dublin, Ireland which is fast become the new Silicon Valley.
Back home corporate tax contributions, percentage-wise are at a new low at a little over 7% of total taxes paid to the US Treasury. The site, Citizen Works, outlines the biggest offenders and how the Fed is taking aim at them with reports on the 25 Fortune 500 companies with the most offshore tax-haven subsidiaries and lists of corporate tax dodgers and fact sheets that outline the discrepancies between corporate income and corporate tax payments. Over the last couple of decades statesmen have been quoted on the subject arguing against bills that propose less corporate taxation allowing more corporate tax evasion.
“Small businesses cannot avail themselves of the Bermuda Triangle. They cannot afford big-name tax lawyers and accountants to show them how to do their books Enron style, but they probably wouldn’t do it anyway, because the small businesspeople in Minnesota do not want to renounce their citizenship. … I simply say that the priority for me, as a Senator, is to go after this ‘Bermuda triangle’ boondoggle. The priority for me, as a Senator, is to go after these multinational corporations that will not pay their fair share of taxes.” - Senator Paul Wellstone (D-MN)
Even though the most often heard criticisms of current loophole cultivation tend to be from the left, perhaps the most surprising proponent of transparency can be found from an unlikely corner: “In order to usher in … a culture of responsibility, corporate America must be responsible, must make sure that there are no shenanigans or sleight of hands, must make sure there is an openness and disclosure about true liabilities and true assets. And if they don’t, they must be held to account.” -President George W. Bush
“Offshore reincorporations add risk for shareholders, since we know it could be more difficult to enforce our legal rights there and we’re not sure how protective the Bermuda legislature and courts will be of shareholders.”- Pat Lipton, Executive Director, State of Wisconsin Investment Board
These fears are well-founded as the next quoted document indicates:“We are registered in Bermuda, and a large part of our assets will be located outside the United States. As a result, our shareholders may not be able to enforce civil liability provisions of the federal or state securities laws of the United States … Bermuda law differs from the laws in effect in the United States and may afford less protection to shareholders.”- PwCC Form S-1, filed with the Securities and Exchange Commission, May 2, 2002.
So, in spite of the fact that the public has been made aware of the multiple down-sides to not holding corporations to account, there is still no grass-roots uprising that would overturn such laws as a corporation being equated to an individual, allowing it to benefit from all the same supports and deductions of an individual human being, even though it is by no means upholding its end of the tax code.
The bottom line is essentially this;“It is the American taxpayers who get hammered when Stanley Works or one of these other companies heads off to foreign shores and does not pay its fair share of our increased national security needs.” – Rep. Lloyd Doggett (D TX)
As reported by Common Dreams the SEC committees tried to crack down on IRS fraud in 2002-3, but testimony from witnesses and aides to the committee assert that this has made almost no impact on fraudulent practices. Congress did nothing substantive, but instead sought to hinder regulation of corporate practices, restricting funds allocated to auditors and other regulators.
For more eye-popping facts and figures go to the Grass-Roots pages of Citizen Works. Here find lists of proposed measures for closing the loopholes that allow sequestration of billions upon billions of taxpayer dollars by non-paying corporations, effectively taking their profits and going to play elsewhere.