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Corporate Tax Holiday in Debt Ceiling Deal: Where's the Uproar?
Have been meaning to write about this, but I’m increasingly amazed at the overall lack of an uproar about the possibility of the government approving another corporate tax repatriation holiday.
(TIMOTHY A. CLARY/AFP/Getty Images)
I’ve been in and out of DC a few times in recent weeks and one thing I keep hearing is that there is a growing, and real, possibility that a second “one-time tax holiday” will be approved for corporations as part of whatever sordid deal emerges from the debt-ceiling negotiations.
I passed it off as a bad joke when I first saw news of this a few weeks ago, when it was reported that Wall Street whipping boy Chuck Schumer was seriously considering the idea. Then I read later on that other Senators were jumping on the bandwagon, including North Carolina’s Kay Hagan.
This is what Hagan’s spokesperson said:
Senator Hagan is looking closely at any creative, short-term measures that can get bipartisan support and put people back to work. One such potential initiative is a well-crafted and temporary change to the tax code that encourages American companies to bring money home and put it towards capital, investment, and–most importantly–American jobs.
For those who don’t know about it, tax repatriation is one of the all-time long cons and also one of the most supremely evil achievements of the Washington lobbying community, which has perhaps told more shameless lies about this one topic than about any other in modern history – which is saying a lot, considering the many absurd things that are said and done by lobbyists in our nation’s capital.
Here’s how it works: the tax laws say that companies can avoid paying taxes as long as they keep their profits overseas. Whenever that money comes back to the U.S., the companies have to pay taxes on it.
Think of it as a gigantic global IRA. Companies that put their profits in the offshore IRA can leave them there indefinitely with no tax consequence. Then, when they cash out, they pay the tax.
Only there’s a catch. In 2004, the corporate lobby got together and major employers like Cisco and Apple and GE begged congress to give them a “one-time” tax holiday, arguing that they would use the savings to create jobs. Congress, shamefully, relented, and a tax holiday was declared. Now companies paid about 5 percent in taxes, instead of 35-40 percent.
Money streamed back into America. But the companies did not use the savings to create jobs. Instead, they mostly just turned it into executive bonuses and ate the extra cash. Some of those companies promising waves of new hires have already committed to massive layoffs..
It was bad enough when lobbyists managed to pull this trick off once, in 2004. But in one of the worst-kept secrets in Washington, companies immediately started to systematically “offshore” their profits right after the 2004 holiday with the expectation that somewhere down the road, and probably sooner rather than later, they would get another holiday.
Companies used dozens of fiendish methods to keep profits overseas, including such scams as “transfer pricing,” a technique in which profits are shifted to overseas subsidiaries. A typical example might involve a pharmaceutical company that licenses the rights or the patent to one of its more successful drugs to a foreign affiliate, which in turn manufactures the product and sells it back to the U.S. branch, thereby shifting the profits overseas.
Companies have been doing this for years, to incredible effect. Bloomberg’s Jesse Drucker estimated that Google all by itself has saved $3.1 billion in taxes in the past three years by shifting its profits overseas. Add that to the already rampant system of loopholes and what you have is a completely broken corporate tax system.
And the whole thing is predicated on that dirty little secret – the notion, long known to all would-be major corporate taxpayers, that there would come a day when there would be another tax holiday.
That time, they hope, is now. According to Drucker, lobbyists met with President Obama last December to ask for another holiday. And now the drumbeats are rolling on the Hill for a new holiday to be included in the debt-ceiling deal.
Senator Carl Levin of Michigan, the same Senator who produced the damning report of corruption on Wall Street, has been trying to fight the problem, introducing a measure that would prevent companies from accessing offshored money through correspondent accounts and branches of offshore banks.
Levin’s Permanent Subcommittee on Investigations has also been investigating how companies might use the cash they save from a tax holiday, surveying companies like DuPont, presumably to find out just how many of these firms really intend to create new jobs with their tax savings.
I’m shocked there isn’t more of an uproar about this. Could you imagine what the Tea Party would be saying right now if there was a law on the books that allowed immigrants to indefinitely avoid taxes on income sent back to family members in the old country, in Mexico and Venezuela and India?
Imagine the uproar if Barack Obama, in the middle of this historic revenue crunch and "We're so broke the world is going to end tomorrow!" debt-ceiling hystgeria, decided to declare a second “one-time tax holiday” for, say, unwed single mothers, or recipients of public assistance? Middle America would be running through the streets, firing shotguns out its truck window, waving chainsaws in mall lobbies, etc.
As it is, leading members of the Senate are seriously considering giving the most profitable companies in the world a total tax holiday as a reward for their last seven years of systematic tax avoidance. Hundreds of billions of potential tax dollars would disappear from the Treasury. And there isn’t a peep from anyone, anywhere, on this issue.
We’re seriously talking about defaulting on our debt, and cutting Medicare and Social Security, so that Google can keep paying its current 2.4 percent effective tax rate and GE, a company that received a $140 billion bailout en route to worldwide 2010 profits of $14 billion, can not only keep paying no taxes at all, but receive a $3.2 billion tax credit from the federal government. And nobody appears to give a shit. What the hell is wrong with people? Have we all lost our minds?
66 Comments so far
Show AllYes, we have all lost our minds.
Ummmmm... and maybe get millionaires out of Congress??
Don't think we've lost them so much as have had them stolen. Probably offshored to those same accounts. Maybe we can get a sanity holiday.
There's a reason that corporations throw zillions into propaganda. It works. Works even better when there's never a counterweight to those voices.
Many people give a shit.
Many are outraged.
However the government will beat you back if you protest.
That is a pretty sad response I know, but it is true, even here in
the Great White North.
It is just like Climate Change, we, the government, whoever will
for the most part do nothing until it is to late.
Most people I know are tired of fighting, I'm quite tired of reading,
listening and viewing the continuous never ending struggle on this planet.
Just tired of all the fighting.
I feel the same.
No matter who you write, or what you say, the same corporate shills get elected and re-elected.
So what is the use in trying. I have better things to do than continue to frustrate myself.
I try and I write anyway. Perhaps there is one moment when the light goes on in their head.
I'm curious here: When posters say they are tired of "trying", "fighting", and "writing", what is it that you are actually doing? Unless we activate ourrselves in a politically meaningful way-- by which I mean, say, joining an advocacy group that aligns itself with our point of view, or calling and writing our elected representatives, or forming a little group of friends who all bombard their elected officials with messages, or take some consumer action, or showing up to raise our voice at a community meeting... then we haven't done anything, really. Posting on these boards and kvetching to our friends is not activating ourselves. I'm not judging what people here have or haven't done-- I'm just wondering if the burnout is from actual actions, or just by being frustrated when things don't change without our being active in the process.
We do have political power-- it is not granted to us from above, though. Political power can be found and exercised in a multiplicity of ways. People like Karl Rove didn't sit around saying, "Oh, I have no power." They found it. Of course KR was and is an unscrupulous, detestable jerk. But if someone like him, who started out a nobody, can grasp his power, certainly better-minded people can as well. Or am I crazy?
According to a recent article approx 1/4 are medicated, another 1/4 we know are self-delusional, and another 1/4 are psycho/soci0paths. Therefore, we the remaining 1/4 are most likely feeling like the fighting Greeks right now! Tired of fighting when no-one is listening. Our only hope is to get the others off their meds & the propaganda machine and get them organized so we can liberate ourselves from corp rule.
PS, I truly appriciate a few remarks that had me hysterically lol:)
Peace!
Oh, and by the way, I am currently saving for a few $100 get out of jail cards for Chris Hedges' choreographed arrests at October Camp/Party! See ya there and maybe there will be too many to arrest:)
Peace...
"Never underestimate the power of a small group of committed citizens to change the world. Indeed, it has never been done otherwise." - Margaret Mead
So far, the only really committed citizens have been a small group of rich guys. Time for us to step up and make our changes.
"Learned helplessness, as a technical term in animal psychology and related human psychology, means a condition of a human person or an animal in which it has learned to behave helplessly, even when the opportunity is restored for it to help itself by avoiding an unpleasant or harmful circumstance to which it has been subjected. Learned helplessness theory is the view that clinical depression and related mental illnesses may result from a perceived absence of control over the outcome of a situation."
http://en.wikipedia.org/wiki/Learned_helplessness
ctrl-z,
Exactly right. You've kept that chicken in a cage so long that when you take the walls off the enclosure, the chicken stays inside the cage area voluntarily.
When Matt says, " And nobody appears to give a shit. What the hell is wrong with people? Have we all lost our minds?", I see he is in a cage of his own. The bullshit media circus has kept the voices of people in forums like this one OUT of the mainstream. This distorted view presented by a few paid elite defenders yelling 24/7 over 99% of the media gives the FALSE appearance of insanity and predatory capitalism worship as the status quo and accepted concensus of the average person.
Matt is falling under the spell of the same bullshit he complains about.
Hey Matt. We get it. We the people may be somewhat naive but it would be a mistake to think that people are stupid enough to telegraph to that pack of paranoid predators ruining this country what shape the response to tyranny is taking.
You don't kill a corporatocracy with blood in the streets; that would actually strengthen the police state.
You kill a corporatocracy by denying corporate profits. Stop being part of the machine and the machine stops working.
I still speak out in emails to pols. However, not to try to convince them of anything as they are all "under contract". I want expectations clearly recorded for my own karmic record.
Not just "no"- HELL NO! TO THE CORPORATE DICTATORSHIP!!
Never forget that corporations are a collection of people hiding behind the curtain of greed. They are your neighbors, family, and so called leaders. They are not your friends and will stab you in the back if they feel threatened.
Why does Taibbi not point out the obvious:
Jobs are created with PRE-tax dollars !!
Ergo, taxes have nothing whatsoever to do with job creation, other than that HIGH rates indirectly encourage businesses to reinvest in growing their companies.
Therefore LOW taxes relate directly to HIGH profits and thus no incentive to increase hiring...no surprise the Corps resist the idea of an increase in taxes
Great information from Matt Taibbi, and very well presented.
To answer his questions about the lack of uproar, perhaps it's because of the lack of media coverage. This is the first I've heard of it.
You're exactly right. Americans think about and talk about what the corporate media presents to them. And good for Matt Taibbi for bringing this up. I haven't heard about this either, and I follow non-corporate news sources.
The issue of corporate tax giveaways is such a fat target, and such an easy one for even brain-addled TV-addicted Americans to grasp, that I don't understand why we don't have more street protests shining a spotlight on corporations. Even the Tea Party crowd could get riled up about the topic, if they spent a few minutes actually THINKING about what they are for and against.
I participated in such a demonstration around the April 15 tax day in my city, and it was well-received and tapped a very deep vein of public indignancy at corporate shenanigans, if all the thumbs-ups and cheers we got from passing drivers was any indication.
But -- the event was organized by MoveOn.org. So -- therefore most of the discussion on "progressive" blogs like this focused how corrupt and ineffectual MoveOn is, and how participating in this MoveOn-organized event was anethema to progressive purity.
Progressives need to spend less time blogging about their progressive purity, and more time showing up in front of corporate headquarters with pitchforks. Until we're ready to join forces with others who don't necessary share 100% of our views, we're doomed to wander in the wilderness. At least the Spaniards and the Greeks have figured out how to make their voices heard.
Go ahead and march wave your freak flags LOL. Do any of u really think the Corp. bosses care anymore WTF we do short of start buying assault rifles and RPGs ? NOT a bit. They know were sheep and will stay right in front of the game or Dancing with the Star or whatever. We'll all be doing this eating cat food in the landfill or at least millions of us will and the rest will drive right on past and their children will pt. and say stuff like, "Mom, Dad why are those old people sitting out there on all that trash eating rotting discarded food?" They'll be told, " what old people honey, oh them just ignore them."
Just like them segregated negros back in the Sixties, eh Seaglass, who should have realized that marchin' and singin' and carrryin' on would never have any impact on the racist White powers-that-be? Those Honkies who held all the power and obviously would never give an inch? So, like, why even BOTHER protesting?
Yeah. Your plan to just throw in the towel is a much better idea. Or at least it's much easier.
Donny, you have a good point. But I live in the middle of teabag headquarters and they are defending the corporations. Sad, but true. Go to redstate.com sometime and read their posts. Or any UT website. The stupidity of these people is amazing. They support the tax cuts, wars, want more drilling. They won't tie it together when their SS is cut. When the things I mentioned above are supported by them, they turn around and bitch that the government spends too much.
And to answer Matt's question of the uproar, we have tried. They aren't listening.
I know what you mean. I occasionally go to FreeRepublic.com just to see what the far right-wingers are whining about, and it seriously freaks me out. Gods, guns, and overt racism run amok on that blog. It's downright creepy, and very disturbing. I feel so dirtied after just READING the hate-filled posts that I feel like I need to take a shower. There is almost no logic nor reason nor fact-based discussion in that world -- it is all about feeding everybody else's fears, bigotry, and paranoia. It's no overstatement to say that when fascism comes to America, it will come waving the flag and carrying a cross.
I bet there are going to be a lot less of them after this debt ceiling debacle because this affair has sickened even the hardest conservatives.
I think we have to have more faith in each other. Even though people are unaware (shall we say) they still know when they are being screwed! There's nothing wrong with people enjoying their materialism, but now is the time for everyone to stand for what's right, put their heads up from what they're doing for a time and get active, while we still have a little freedom left. We must trust the inner decency of our fellow countrymen and believe that they will heed the call. The pictures painted here of the population are too negative and probably apply to a very small percentage. We must not act like wimps in our own social circles. We need a simple course of action though and one that we can all do which I would imagine would have an effective result would be to get out of the big banks, have nothing to do with them and do business with credit unions or community banks. That's simple but we need to do this on a grand scale. We can foil the bastards!
Yes, they've lost their minds.
They have been propagandized. People can only think within the media's propaganda frame. Widely distributed political discourse is non-existent in America.
We the people is the government. The government acts for the benefit of the people. Attacking the government is attacking the people.
Yes phasor that is exactly right. We have to keep reminding them that when they attack the government they are effectively attacking the people.
Reagan has turned our Republic into a failed state.
If Corporations aren't going to pay, then they need to start paying higher wages so the workers can pay taxes.
Somebody has to pay the dues for Club Merika or the club-house is going to fall apart.
As soon as I search Google on my Mac-book and find where the next demonstration is I'm going to jump in my Ford, filler up at the 76 station for the trip to S.F., grab a coffee at Starbucks, then stop in at Walmart to buy posters and markers.
Since there's no public transportation from the North Bay I'll have to time it just right to avoid the massive traffic jams and rummage around for the 8$ for the toll at the Golden Gate and refinance my house to help pay for parking in the city (oops can't do that I'm already underwater).
And before I go I 'll have to unload my truck after our trip to Costco. I'd hate to have my new GE refrigerator and Sony big screen TV ripped off while in the city.
"Honey, could you do a google search for the closest Burger King to the location of the demonstration? I'd hate to be out here demonstrating on an empty stomach."
Or you could just sit home doing nothing while making fun of those who do more to express their opinions than just post things.
I know it may not be obvious but my comment is not a criticism of those doing things but is directed toward those who are not, to those who have a million and one excuses to do nothing, and to those who are completely surrounded by the corporate hegemony and don't realize it. Do you actually think that the character I made up would actually go to a demonstration? His world is not bad enough yet, at least it's not obvious too him how bad it really is. Yes, Matt, most have lost their minds, or at least their will.
Ooops. :-)
Q, I'll assume you aren't just being sarcastic and cynical.
I have some suggestions for you: There is transportation available to and fro North Bay: car pool, or take the bus. Forget Starbucks and Walmart. Make your posters out of used cardboard. Get some markers or large crayons at a thrift store, or maybe some neighborhood kids could help you out by sharing theirs. That would provide you with an opportunity to discuss why you are demonstrating.
I don't know anyone who eats at Burger King or even has a large screen TV. If they do, they might want to think about their spending priorities. Food? Better to take along some dried fruits, nuts, and raw veggies. Make a batch of oatmeal cookies to bring along. So we'll see you there?
The most effective protest sign I ever made was done out of a spare towel, and lengths of an old t-shirt I cut up to spell out a message. Mine looked much better than the ones the gov't put out even if it was very ratty. I used pins to hold the fabric together, and after the vote was over I still had a very nice ratty old towel.
You are quite the resourceful person. I would never have thought of using a spare towel and t-shirts. And ratty is good: recycle/re-use!
Or use staples instead of pins!
I have a question. How many Americans understand what payroll taxes are and what they fund? That's one of the answers to why there's no uproar. When I first started working I honestly didn't know what FICA was and when I started being self-employed in '79 I honestly didn't understand what the self-employment tax was -- just another tax of a myriad of taxes. I should add that in 1976 I was 20 years old and I had been on my own for over a year. I had a college preparatory education and none of these basics were taught and education has definitely gone downhill since then.
"How many Americans understand what payroll taxes are and what they fund?"
____________________
Sadly (but not surprisingly), my best guess, Samalabear, is very few.
In fact, just a few days ago I was having a conversation with a 48-year-old friend of mine regarding this "debt-ceiling" charade. I was calculating and comparing aspects of the federal budget that add to the deficit such as rampant imperialism and tax cuts/bailouts for the opulent. I then rhetorically asked, "How much does Social Security add to the deficit?" I received a blank stare and a shrug from my friend, who thought I was actually asking him for the answer. Somewhat stunned by his confusion, I paused for a moment and said, "zero, zilch, nada--Social Security does not add to the deficit." I wanted to add a sarcastic "duh," but controlled the urge.
It's difficult to have a serious conversation with people lately about anything of political or social relevance. Most of the time, people--even so-called "educated" people--have no clue regarding what should be common sense.
It struck me that if this seemingly intelligent friend possesses no understanding that Social Security is self-funded through payroll tax deductions and adds nothing to the deficit, then he's not alone. In fact, his befuddled reaction confirmed for me (once again) why it's so easy for political miscreants like Brand Obama & Co. to bamboozle the public into accepting "Shock Doctrine Austerity" and "Structural Adjustments" as necessary and fiscally prudent: they know the public hasn't got a clue.
I do office temp work (all I can get in this economy, but that's another story), and I'm truly stunned to listen to people talk in the break room and at lunch. They are "college educated", all between say 28 and 45, and astonishingly ignorant about so many things. Many people my age (63) are better informed and just more aware of many ideas with far less formal education.
I has better idea. Remove that tax loophole and tax the corporate profits wherever they are hidden.
Oh, that would be called 'raising' taxes and that's like asking the republicans in power to stick their feet in a pot of boiling water, or something.
We need a credible threat/reality of a third political party. A party rooted on progressive values. Things as they are can no longer be accepted. Perhaps I am being naive. Perhaps the Green party or various socialist parties can fulfill this role. What I do know is that what we have now is not genuine democracy and that further, the world is headed towards serious economic, environmental and political collapse, with the United States leading the way. With this collapse will come untold suffering for generations to come.
An official 3rd Party to the left of the Dems has the potential to cause the election of Repubs in close contests, witness: Gore vs Bush in 2000. It's not a good idea unless you adopt a strategy to put no candidate on the ballot in a close race and then endorse the Dem candidate. Thus, the leftist 3rd Party can make their ideological case in races where their presence cannot flip the result to the Repubs.
An unofficial party, such as the Tea Party, poses no threat to the election of Repubs by stealing votes in a close election because they are not on the ballot as a separate Party. In reality, the Tea Party is a faction of the Republican Party whose creation was funded by exceedingly wealthy right wing Repubs such as the Koch brothers. We could do the same thing within the Democratic Party by creating a progressive policy oriented "Party" to push our agenda into the public media and consciousness, however, we already have the Congressional Progressive Caucus in the House with around 60 members. The CPC articulates the progressive agenda and has created it's own budget for 2012 called The People's Budget, which I highly recommend. Advancing the progressive agenda could be assisted by creating CPC oriented groups to increase public awareness through marches, rallies, publicity campaigns, and so forth. That's the tack I would take rather than create an official 3rd Party.
"The leftist 3rd Party can make their ideological case in races where their presence cannot flip the result to the Repubs."
I'm with you. If a true socialist party in the U.S. can't even win a significant number of mayorships, city council seats, and state legislative seats in the country's more progressive districts, it sure as hell isn't going to win 270 electoral votes in a national presidential election. Let's start with local and winnable elections, and build from there.
Most people don't like taxes. There has to be a better way.
Direct democracy
Where is the uproar, indeed? Those that have not sold out to the numb comfort of the veal pen by now are suffering isolation and outrage fatigue from an unrelenting assault. But thank you, Matt, for your persistence, consistency, and refreshing irreverence. It is much appreciated.
"Those that have not sold out to the numb comfort of the veal pen by now are suffering isolation and outrage fatigue..."
Great description: "the numb comfort of the veal pen."
I'm not suffering from outrage fatigue, though. That's what those bastards are hoping we will do. In fact, someone in the Obama camp said that's what they were hoping. People are taking it all in and they're still angry. It's a question of when outrage turns into action. And it will.
When the US Treasury in the 1930's couldn't get companies to move their money for the general good of the national economy, quite simply it taxed them.
We have a too similar situation now. The corporations are idling about $2.1 trillion dollars. If they will not reinvest this stagnant cash for the social good, then the Treasury should take it away from them and create productive purposes for it.
Nothing new about any of this, of course. Simply wise economic tax policy.
Really? And when was the last time the Treasury "created productive purposes"?
Besides, much of this is the money the Treasury and Congress gave them.
Everyday there is more news of the criminals in DC. It is so sad that they are destroying this nation, all out of lost for power and personal greed. It is just down right evil.