The President Just Announced This —

Our immigration system has been broken for decades. And every day we wait to act, millions of undocumented immigrants are living in the shadows: Those who want to pay taxes and play by the same rules as everyone else have no way to live right by the law. That is why President Obama is using his executive authority to address as much of the problem as he can, and why he’ll continue to work with Congress to pass comprehensive reform.

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Stop Shopping Tax Dodgers!

Some Corporations Are Moving Addresses Overseas To Dodge Paying Fair Share Of U.S. Taxes

walgreens

We talk a lot about the grave problem of inequality and how our economy is not working for most Americans. One of the causes of this big problem is that corporations and the wealthiest are taking advantage of the system, exploiting tax loopholes, and rigging the game to benefit themselves, often at the expense of everyone else. The latest tax-dodging tactic that some corporations are considering using is a perfect example of this rigged system–and demonstrates why we need our legislators to take decisive action to stop it.

What Is The Problem?
A loophole in the tax code essentially allows a corporation to renounce its corporate citizenship in the United States, move its address overseas by merging with a foreign company, and dodge its U.S tax obligations by paying most of its taxes to a foreign government with lower tax rates than the U.S. The process takes place primarily on paper — most corporate operations remain here. The corporations that do this want all the benefits of being an American company without paying their fair share of taxes. That makes the rest of us pick up the tab.

The practice has become known as “inversion.” But what it really amounts to is desertion. And it could cost Americans tens of billions of dollars.

Who Is Taking Advantage?
There are 47 firms in the last decade that have exploited this loophole, according to new data compiled by the nonpartisan Congressional Research Service. But it’s a hot topic again because at least a dozen U.S. firms are currently considering taking advantage of it.

One of those corporations is Walgreen. The company has always prided itself on being America’s go-to pharmacy: from 1993 to 2006, it had the slogans “The Pharmacy America Trusts” and “The Brand America Trusts.” A biography of the company is entitled, “America’s Corner Store: Walgreen’s Prescription For Success.” Walgreen chief executive Gregory D. Wasson has said the company is “proud of our Illinois heritage.”

At the same time, Walgreen is currently considering merging with European drugstore chain Alliance Boots and move to Switzerland as part of a plan to dodge up to $4 billion in U.S taxes. The company that gets almost a quarter of its $72 billion in revenue directly from the government through Medicare and Medicaid is trying to reap even more profits while leaving taxpayers holding the bag.

Walgreen isn’t the only one. Pfizer, the pharmaceutical company, tried merging with the smaller U.K.-based AstraZeneca earlier this year and switch its address, where the tax rate is lower. It was estimated the move would save them at least $1 billion a year in tax obligations to the U.S. (the deal ultimately didn’t go through). Medtronic, a medical device company, plans to move its corporate address to Ireland, a tax haven, to avoid paying U.S. taxes on $14 billion. Chiquita, the banana distributor, is also heading to Ireland after acquiring Fyffes. These tax dodges, as Fortune magazine calls them in this week’s issue, are “positively un-American.”

What Can Be Done?
President Barack Obama’s 2015 budget proposes making these corporate desertions more difficult by raising the minimum levels of foreign ownership required to 50 percent (currently it is just 20 percent), which means that U.S. corporations could not move their address abroad unless they actually ceded a controlling interest to foreign owners. Congressional Democrats have made similar proposals. Treasury Secretary Jack Lew recently called for more “economic patriotism” and urged Congress to “enact legislation immediately” to close the loophole. Leaders on both sides of the aisle want comprehensive tax reform, but finding common ground in the current Congress could take a while. The simple fact is that as more and more companies exploit this loophole, a solution for this problem is needed right away–and Congress has the power the solve it.

BOTTOM LINE: More and more corporations are taking advantage of a tax loophole that helps their bottom line while costing American taxpayers billions every year. These companies want to continue to take advantage of the things that make the U.S. the best place in the world to do business, while at the same time pay less than their fair share by moving their corporate addresses overseas. That desertion is unfair, unpatriotic, and has got to change.

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This material [the article above] was created by the Center for American Progress Action Fund. It was created for the Progress Report, the daily e-mail publication of the Center for American Progress Action Fund. Click here to subscribe.

A Congressional Report Card for the 99%

The grades are in, and you can see how lawmakers fare on the most important issue of our time: the grand divide between America’s rich and everybody else.

By Sam Pizzigati
Sam Pizzigati

Lots of Americans today are watching how members of Congress go about their business. Environmentalists and electrical workers alike keep track of key congressional votes. So do retailers and farmers. Even poker players are following how members of Congress rate on the issues that hit home.

All these groups have, of course, their own specific priorities. Their representatives are looking out for their own supporters, not looking at the “big picture.”

That big picture, meanwhile, hasn’t been particularly pretty for some time now. The vast majority of Americans — the 99 percent — have been racing on a treadmill ever since the 1970s. We’re working harder, with little to show for our effort. But for our top one percent, it’s an entirely different story. They’ve been doing just fabulously.

The growing gap between the rich and the rest of us didn’t just happen by chance. Conscious political decisions — on taxes, on trade policy, on regulations — have all been driving the divide.

Who made these decisions and changed the rules that determine how the U.S. economy operates? Ultimately, that responsibility rests with Congress. So shouldn’t we be rating our lawmakers on their law making?

My colleagues and I at the Institute for Policy Studies think so. We’ve just assembled the first congressional report card that grades lawmakers on what they’ve done to make sure that all Americans, not just a privileged few, can share in the wealth that we all create.

This new report card compares members of Congress on 40 legislative actions taken over the last two years that either improve opportunities for our 99 percent or feather the nest of America’s most affluent one percent.

Up for review: everything from legislation to establish a “Buffett Rule” minimum tax that all wealthy Americans must pay to a bill that would raise the minimum wage and index it to inflation.

Lawmakers received a positive point for taking an action that narrows America’s economic divide and a negative point for attempts to widen it. The report card, now available online from the Institute for Policy Studies, totals these points and then translates the numbers into overall letter grades.

Some lawmakers, after all this tallying, look really good. Five senators — Sherrod Brown of Ohio, Dick Durbin of Illinois, Al Franken of Minnesota, Bernie Sanders of Vermont, and Sheldon Whitehouse of Rhode Island — all rate an “A+,” as do 14 members of the House of Representatives.

But 48 members of the House end up with an “F,” and 11 Senators similarly flunk. All of these lawmakers — a list topped by Kevin Brady, the Texas representative with the single most one percent-friendly grade point average in the entire Congress — have failed 99 percent of their country.

These lawmakers, naturally, don’t see things that way. They consider their votes to enrich the rich in everyone’s best interest. The less the one percent pays in taxes, their argument goes, the more they will invest in and grow the economy.

Americans hear this claim all the time. Now the nonpartisan research arm of Congress has put that claim to the test.

A new Congressional Research Service report examines whether any link exists between economic growth and tax rates on the rich. This report crunches data since 1945, years that have seen the top tax rate on America’s rich drop from over 90 percent to 35 percent today.

What has this steep decline in tax rates on high incomes generated? In terms of savings, investment, and productivity growth: nothing. The Congressional Research Service has found no correlation between lower taxes on higher incomes and economic growth.

“The top tax rates,” concludes the CRS, “appear to have little or no relation to the size of the economic pie.”

But tax rates on the rich do significantly impact how that pie gets sliced. The slice that went to the nation’s top 0.1 percent back in 1945 amounted to 4.2 percent of America’s national income. By 2007, that slice had tripled in size to 12.3 percent.

Members of Congress are still slicing away today. The difference? We now have a report card that grades their slicing.


OtherWords columnist Sam Pizzigati edits Too Much, the Institute for Policy Studies’ weekly newsletter on excess and inequality. He’s a co-author of the Congressional Report Card for the 99%. OtherWords.org