GAO Reports Bailout and Tech Firms Love Tax Havens 347
theodp writes "Most of America's largest publicly traded corporations and Federal contractors — including those receiving billions of dollars from US taxpayers to finance their recovery — have set up offshore operations that could help them avoid paying US taxes, according to a GAO study released yesterday. Of the 100 largest public companies, 83 do business in tax-haven hot-spots like the Cayman Islands, Bermuda, and the British Virgin Islands. The report found that Citigroup, a recipient of $45B in bailout funds so far, has set up 427 subsidiaries in tax-haven countries, including 91 in Luxembourg, 90 in the Cayman Islands, and 35 in the British Virgin Islands. Household names on the lists from the tech sector include Apple (1 tax haven subsidiary), Cisco (38), Dell (29), HP (14), Intel (6), IBM (10), Microsoft (8), Motorola (4), and Oracle (77)."
Re:Tax policy (Score:4, Interesting)
Don't kid yourself, large US based companies doesn't pay tax either. Tax heavens are just an easier way to avoid paying tax, it is saving the companies money on the payroll to accountants and number magicians, but no not on the tax bill. Only people and small companies pay tax.
Re:This isn't surprising... (Score:3, Interesting)
Switch to Land Value Taxation (Score:1, Interesting)
Tax the full rental value of bare land, and remove all taxes on labor and capital, excluding social security.
Not only would you provide a bigger economic stimulus than any of the current proposals -- one estimate puts it at a trillion dollars per year (see http://wealthandwant.com/docs/Tideman_Applications_LVT.html [wealthandwant.com]) without deficit spending -- it's pretty difficult to stick an acre of Manhattan in a Swiss bank account.
Plus, capital likes to flow to where there are low taxes. The giant sucking sound would be headed back to the United States, for once.
It would STILL be better. (Score:5, Interesting)
To drive the economy, you want the people with the LEAST money to spend MORE money.
The VELOCITY of the money is what drives our tax system. The government gets more taxes if a dollar is used 100 times than if it is used 10 times.
Buying a pizza - taxed. ... etc
Pizza shop owner pays delivery guy - taxed.
Delivery guy goes to dinner with his girlfriend - taxed.
Restaurant owner pays cook - taxed.
Cook buys muffler for car - taxed.
Pump enough money into the lower economic rungs and more pizza delivery guys will have to be hired to meet the demand for more pizzas.
Give the money to some company that's going to stash it in an off-shore tax haven ... the US jobs stagnate.
Re:Yes. (Score:5, Interesting)
I guess you haven't heard of many of the "offices" in the Cayman Islands consisting of one room, one phone, and one employee (never at his desk). Many exist purely to claim business in the country and filter money for tax purposes. They do no business there at all but save taxes.
Of course, this isn't every office or company. But many.
Re:US Corp. Tax Load VS Other Countries is... (Score:3, Interesting)
Re:This isn't surprising... (Score:2, Interesting)
"their duty is to maximize return on investment for their stockholders, which means doing everything they can legally to minimize their tax liability."
they also do everything they can to minimize everything else too. This is why i now refuse to work for any company which is publicly traded. These companies dont give a shit about anything but the shareholders, customers and employees dont matter in the least.
In fact, i may go further still & refuse to buy from publicly traded companies, but that will be a tough boycott to carry out.
Re:US Corp. Tax Load VS Other Countries is... (Score:4, Interesting)
Yes we would. However such a policy would make sense, which is why it would never be implemented.
Re:Yes. (Score:5, Interesting)
Apple setup in Ireland to appease an EU mandate regarding labor content in their products. This sort of thing was also done by the US to Japanese TV manufacturers. It's a time-honored way to get manufacturers to spend a little money in the country they're selling into-- to avoid getting hit with taxes and duties.
However, very little manufacturing goes on in the Caymans, the BWI, and Luxembourg. They're tax havens, just like Cheney's Halliburton likes to use. Getting back that revenue would mean the end of corporate welfare, and that's unlikely to happen soon.
So call a shovel a spade and don't weasel word about the implications.
Corporate, torture apologists (Score:5, Interesting)
Err, no. The main reason they are held in Guantanemo was for a jurisdictional dodge about holding them at all. One that didn't work out, as it turns out; the courts didn't buy the idea that they were beyond the reach of US courts just because they weren't within the boundaries of the United States.
Nope.
http://www.nytimes.com/2008/02/17/opinion/17davis.html?_r=1&ex=1360990800&en=a3b1d35d17a4d480&ei=5090&partner=rssuserland&emc=rss&pagewanted=all [nytimes.com]
My policy as the chief prosecutor for the military commissions at Guantanamo was that evidence derived through waterboarding was off limits. That should still be our policy. To do otherwise is not only an affront to American justice, it will potentially put prosecutors at risk for using illegally obtained evidence.
Emphasis mine.
Nothing in this report says the companies do no business in the "tax haven" countries.
Sure. If I posited the same argument that a person who fit the profile of a crack dealer was passing "something" to someone in a car after exchanging money, you'd be the first in line to throw him into prison. I'm not saying they don't deserve due process, but a judicial branch that wasn't a secretarial service for corporate America would at least investigate.
Horrors. Why would a country ever want to do that?
I'm not blaming the country, or claiming the corporations are automatically guilty. When they do business that removes tax money from the community that built it's wealth, I consider that a worse offense than someone who is falsely collecting welfare.
I'm upset with the habit of Americans getting upset over social welfare and not over corporate welfare. When corporations have more rights than an individual person, not even equal rights, I consider that to be reprehensible. I can't buy a palm tree in Costa Rica and reduce my tax liability as an individual, but I could if I formed an LLC. In my opinion, that's bullshit.
Re:It would STILL be better. (Score:3, Interesting)
I agree with you, but for different reasons.
The federal government of your United States is pumping money into failed business models. Consumers are far more likely to efficiently channel that money into the growth industries of the future than the government is.
Having said that, I don't actually believe the claimed economics of the bail-out. You can't spend your way out of a recession. Also, it is not desirable to tax that dollar as much as possible, as the whole point of the bail-out is to inject money into the real economy, and tax does not do this.
The only bits of Keynesianism that might work are pouring money into useful infrastructure that will help reduce costs of business growth. In America, however, your imbalanced Senate will ensure the money goes to building bridges to nowhere instead of revamping, for example, urban transport and communications networks, where the money is needed most.
There are further complications in a country as indebted as my home United Kingdom, where consumers have made the only rational choice and used bail-out money to pay off their debts. This does nothing to boost the economy in the short (spending) or long (infrastructure) term, though it will re-balance our economy a bit in the medium term.
I think you missed something, too (Score:1, Interesting)
I interpreted the article as saying that of the largest 100 companies, 83 "conduct business" in tax havens and 17 do not (see the first paragraph). The sentence you quoted from the article lists some of the 17 which I interpret as "not tainted" by virtue of not conducting business in tax havens.
I noted this as I work for Lockheed Martin and there is (rightfully so) a huge emphasis on ethics. I am pleased that my corporate leadership practices what they preach.
Re:This isn't surprising... (Score:2, Interesting)
If all the relevant laws were properly enforced, harshly. It would no longer be true. For a civilian, the punishments are far out of proportion to the potential benefits of committing fraud, robbery and so forth, even if someone were completely amoral, they would think twice.
It would probably be a good idea to enforce this for companies too. Things like fines worth several decades of revenue and the requirement to pay off massive chunks every year or face dissolution of the company and arrests of board members.
I suspect that if companies faced the same scale of punishments that civilians did. They'd be less cavalier with "it's our duty to break the law".
Re:Oh please, torture? (Score:3, Interesting)
If you've ever watched the movie "Joyeux Noël", you would know that "fraternizing" is an extreme threat to the social order of warfare, and punished accordingly.
From Ebert [suntimes.com]
He is accurate, however, in depicting the aftermath: Officers and troops were punished for fraternizing with the enemy in wartime. A priest who celebrated mass in No Man's Land is savagely criticized by his bishop, who believes the patriotic task of the clergy is to urge the troops into battle and reconcile them to death.
Torture is a means of maintaining the required psychological boundaries which military duty entails.
Somewhere on the Michael Moore DVD, there is a scene of young American soldiers abusing an elderly Iraqi man, is tied up, has a black hood on his head, and appears to have some kind of injury. Would you let your own grandfather lie there in that condition? The troops resolve the cognitive dissonance by humiliating the man for his stress erection.
The men on both sides who failed to kill each other one Christmas night were dispatched on both sides to the bloodiest fronts in Europe. Who or what exactly was harmed by these men briefly failing to shoot at each other?
I suspect few of the men known to have fraternized survived the war. No army punishes its torturers as harshly. The actor who plays the drill sergeant in "Full Metal Jacket" was a real life drill sergeant. Under a psychological barrage of that intensity, not even the terminally obtuse fails to internalize the prevailing value system, and I'm not talking about the value system as portrayed in their recruiting pamphlets.
If patriotism was a rock band, torture would be one of the groupies.
Re:Just ask US Naval Pilots & Special Forces (Score:3, Interesting)
You got one big difference people either don't think about or fail to mention. While soldiers might have had waterboarding or something similar applied to them (probably to train them to be less sensitized to it if done to them), the soldier is not going to be murdered by his superiors. They're never going to go overboard or make serious mistakes on their own comrades, and whether anyone admits this or not, anyone having this done to them (by their own military) is going to realize this.
A 'detainee' doesn't have this protection; he has no idea how far they will go and can fully expect to be drowned to death if he doesn't give them what they want (or what he hopes they want that he has so that he won't be murdered).
Even Hollywood recognized this, and years before 9/11 happened; go watch The Siege and look at Bruce Willis' part in the film; or even the whole movie, and maybe you'll understand the significance of why the treatment of so-called detainees will never be the same as treatment of ordinary people or those not considered to be combatants of any kind.
But going back to the use of simulated waterboarding in training, no matter how close the training is for our troops, it can never be the same conditions as someone who was grabbed by our military because they have no real protections that our own people have vis-a-vis their teammates and supervisors. (Does anyone seriously believe a guy is going to treat his buddy as badly as he would someone they've grabbed or bought from an Afghan warlord as presumably a combatant?)
I'll give you another example; use of torture or misconduct by soldiers encourages its use against them by others. Does anyone remember the stories of American Indians scalping people? Do you know why they did that? Because the white men (soldiers) did that to the Indians they found, and the Indians thought it was a sign of respect to warriors or at least it was a legitimate practice since the white men did it, so they did it too. But they didn't start doing it until after they saw how the white soldiers did it first.