Sadly, I wasn't shocked when I read in the paper this morning that Caterpillar Corp, the big heavy equipment manufacturer, has been dodging paying its US taxes. Over the past 13 years they saved $2.4B in taxes by funneling a lucrative portion of their business through a sham division set up in Switzerland.
It seems they paid PricewaterhouseCoopers $55M to show them how to slink their way around US tax laws. I won't bore you with the details, but just know that it was all smoke and mirrors. But it was all (apparently) legal. And there's my complaint. Businesses are paid to maximize profits and minimize taxes. It's Congress, which enabled these shenanigans, that is supposed to represent US!
But big companies, aided by an army of lobbyists, own Congress, and it's Congress that writes the rules. Want a unique tax break, a special deduction, permission to avoid taxes by something like....oh, I dunno....setting up a sham division in Switzerland? A few quiet campaign contributions and your wish can come true.
So the Treasury gives up $2.4B here, $3B there, on and on, and to paraphrase the comical former Senator Everett Dirksen, "Before long you're talking real money." And this, boys and girls, is half of the reason we have the horrible government deficit we do.
Trouble is, 100% of the effort to cut said deficit seems to involve cutting spending, some of it from places that don't need to be cut. Why isn't 50% of our deficit cutting effort focused on stopping these sham tax dodges that result from all the Swiss cheese loopholes in our tax laws?
We need a clean-sheet-of-paper tax code re-write! If you have a chance to talk to a congressional candidate, ask them if they will sponsor a bill to completely re-write our tax laws. Accept only a "yes" or "no" answer. If they try to lay a bunch of flowery BS on you (and they will), ask them again for a straight yes or no answer. And record their answer and put it on YouTube.
Unfortunately, it seems the only way for an up-and-coming politician to gain the nomination of their party and tap in to the financial contributions that will enable them to get elected (and re-elected) is to show they are a "team player", that they will go along with what their senior party elders tell them to do.
Like granting unique tax breaks, special deductions, and permission to avoid taxes by something like....oh, I dunno....setting up a sham division in Switzerland.
*sigh*
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Our best hope is when the news does shine a light on these loopholes and congress is embarrassed...oh...that's right...you can not embarrass an institution that has no shame.
ReplyDeleteThis is a shame of a situation.
ReplyDeleteNow of course if you or I forget to declare a single dollar we'll get the full weight of the IRS on us. I always think of The Simpsons when Smithers tells Mr. Burns, "Thanks to our creative accounting we only pay $3 in taxes" and Burns says, "$3?! We're getting screwed!" That seems an accurate portrayal of Corporate America.
ReplyDeleteRight on!
DeleteAnd yet now the rest of us dealing with only 6-figure sums of money can no longer hide it tax-free in Swiss banks, because of some new law. I don't know the details, but our Russian mob clients are out for blood over this...
ReplyDeleteMaybe Steve Forbes had the right idea about abolishing the IRS and most of the tax laws and loopholes. He suggested a return could be printed on a postcard that read: How much profit did you make this year; you owe us ten percent. No exceptions. If corporations paid their fair share I think our deficit would vanish like piss in a swimming pool.
ReplyDeleteCorporations want special treatment, special tax loopholes, the right to a religious opinion... Sigh.
ReplyDelete