Here’s What Inversions Are Costing Us

Inversions — or tax maneuvers that reward U.S. corporations that declare themselves overseas residents to avoid paying taxes in America — have been in the news a lot lately, because more than 50 percent of these deals have happened in the past five years.  And will cost ordinary Joe and Jill Americans nearly $20 billion over the next decade — critical dollars that could grow and expand our middle class.

Here’s the bottom line: When corporations invert and pay less in taxes, other working Americans have to pay more to help fund the services we all rely on. (Like maintaining the roads and bridges they use to bring their products to market, equipping our schools with the resources they need to educate/train a base of potential employees, and equipping our military to protect their ability to conduct business not just in the US, but across the globe — just to name a few.) Most working Americans don’t have access to fancy accounting tricks — and parasitic corporations shouldn’t be able to stuff their pockets by using such tricks at our expense.

But if that isn’t already beyond the pale, Corporations that have already inverted are getting $1 billion a year in federal contracts, according to Bloomberg News. Clearly, they’ll do everything they possibly can to be less American when it’s time to pay their taxes, but they’ll claim to be more American when it comes to scoring lucrative government-funded projects.  And what they’re not paying?  Well those funds end up picked from our pockets when we, as ordinary Americans, pay our taxes.

What the Treasury Dept has done is essentially the equivalent of sticking a finger in a leaking dyke.  Congress needs to act to eliminate #Inversions and to hold Corporations accountable for pay their fair share.  Currently, two bills have been introduced and are sitting in Committee: HR5278 in the House, and S2704 in the Senate.  Each bill has been introduced by a Democrat and NO Republicans have signed on as sponsors.  It is well past time that we insist they STOP rewarding parasitic corporations that choose to desert America.  These companion bills titled, the No Federal Contracts for Corporate Deserters Act, would bar parasitic “inverted” corporations from getting U.S. government contracts once they change their corporate address to avoid U.S. taxes.  The 113th Congress is coming to a close and we need to pressure Congress to pass a No Federal Contracts for Corporate Deserters Act BEFORE the closing gavel on the 113th Session.

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Rep. Amodei and the GOP’s House of Cuts

Help Make Campaign Contributions More Transparent

WeThePeopleHelp make the money in politics more transparent. Please sign this petition to ensure 501c4 organizations must devote their efforts “exclusively” to social welfare. That would force organizations like FreedomWorks, Crossroads, CrossroadsGPS, and yes, OFA (Organizing For America into tax-exempt categories where their donor contributions would need to be disclosed.  No longer would they be able to say they’re “social welfare organizations” that do relatively nothing to promote “social welfare” but do pretty much everything to promote an ideological political agenda.

Currently, at whitehouse.gov, there is a petition on the We the People page titled:

 “Issue an Executive Order nullifying IRS ‘regulation’ re: 501c4’s and mandating the original statute be enforced.”

The replacement by the IRS of the word “exclusively” in the original and still-extant pre-1959 501 c (4) statute, with the word “primarily” in the procedural ‘regulation’ manual,simply put, violates the law. At whatever cost to those who have ridden this loophole to the absolute corruption of our political system by money, the original wording of “exclusively social welfare” needs to be enforced.

As I write this post, that petition at whitehouse.gov has only 16,104 signatures.  That means it needs 83,896 more signatures for President Obama to make good on his promise to address any petition which garners 100,000 signatures.  I’m not sure that President Obama can actually take that action via Executive Order, or whether, since it’s an IRS Regulation, it would have to go through the process by which regulations are updated/changed, but needless to say, if nothing else we could force the President to force the IRS to amend their regulation and properly administer the long-standing statute.

Sign-the-Petition-green.fw

If you don’t already have a logon for whitehouse.gov, you’ll need to create one so you can sign the petition (that’s how they ensure one person can’t sign a single petition thousands of times).  But, PLEASE sign this petition!

After you’ve signed the petition, if you have a Facebook or Twitter account, make sure you share a link to your friends and followers.  We can do this!  It’s time to put some integrity back into our politics and finally know where all those campaign dollars are coming from.

Transplanting Taxes from Corporations to the Rest of Us

American taxpayers are increasingly picking up the tab for unpaid corporate taxes.

— by Scott Klinger

Scott Klinger

Today, corporate profits are setting all-time records while middle class families continue to struggle financially. These trends are intertwined.

Whether you’ve clicked to send your tax forms to the IRS along the cyber-highway or dropped your return in the old-fashioned blue mailbox, you’ll be paying extra to cover the growing amount of taxes that the nation’s clever corporations are shunting onto individual taxpayers.

Officially, the U.S. corporate tax rate stands at 35 percent, but in practice it’s far lower. Corporations have lots of tricks in their box of tax-avoidance tools.

Consider Pfizer’s track record. The drugmaker increased its offshore profits by $10 billion in 2012, boosting its offshore stash to $73 billion — all of it untaxed by Uncle Sam. Like most pharmaceutical companies, Pfizer registers its patents in a low-tax offshore haven, and then charges a high price for the use of this “intellectual property.” Doing so, it shifts all of its U.S. profits offshore, avoiding U.S. taxes and bloating its overseas bank account.

Pfizer’s tax dodging prowess has earned it a gold medal in the sport, but it has also drawn unwanted attention from the Securities and Exchange Commission. The SEC wrote to Pfizer last year asking them to explain four years of large losses in their U.S. operations despite reporting about 40 percent of their sales on American soil. Undeterred by the SEC investigation, Pfizer added a fifth year of U.S. losses to the string in 2012.

Imagine for a moment one of the physicians that prescribes Pfizer’s products taking their diploma off their office wall, carefully packing it up, and shipping it to a bank vault in the Cayman Islands. That diploma represents the doctor’s intellectual property. Without it, they would not be able to practice their profession.

After each visit, patients approaching the check-out desk would be given their bill and an envelope to mail their check to a post office box in the Cayman Islands. Faced with confused looks, the receptionist cheerfully explains, “Well, we have to pay for the use of the skills represented by the diploma, which is housed in the Caribbean.”

The corporate offshore tax dodge that shifts $90 billion of tax expenses onto individual taxpayers this Tax Day is just that crazy. Just like having a doctor’s diploma parked in the Cayman Islands does nothing to improve the quality of care, having corporate profits transferred from America to tax haven nations provides no enhanced benefits in terms of product quality or service. In other words, there is no economic value. It only serves to add more to already-overflowing corporate coffers.

Taxing Economics, an OtherWords cartoon by Khalil Bendib

Taxing Economics: Tax havens put the corporate cart before the individual horse by Khalil Bendib

In the 1950s, corporations paid nearly a third of the federal government’s bills. Last year, thanks to the antics of Pfizer and other examples of overly creative accounting, corporate income taxes accounted for less than a tenth of Uncle Sam’s total revenue. This dramatic shortfall shows up in two ways — federal budget deficit growth and the growing trend of individual taxpayers paying an increased share of the costs of government.

Only about two in every thousand American businesses are even eligible to play this game, and far fewer actually do. Most business owners are proud to pay taxes they know support schools, good infrastructure, and national security.

If tax-dodging corporations were people, they might say thanks to the responsible taxpayers who are picking up their share of unpaid taxes. But since they aren’t human, allow me to say on their behalf, “Have a Nice Tax Day.”

Scott Klinger is an Associate Fellow of the Institute for Policy Studies.  Distributed via OtherWords. OtherWords.org