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Today's Top News
'Real Patriots Pay Their Taxes'
A headline in a recent issue of the Progressive Populist caught my eye: "Real patriots pay their taxes."
The story was written by two directors of an organization called "Business for Shared Prosperity," a group that bills itself as a network of "forward-thinking business owners, executives and investors committed to building enduring economic progress on a strong foundation of opportunity, equity and innovation." In other words, a group of businesses that believes being a good citizen has it own rewards.
I have always put retiring U.S. Sen. Herb Kohl in that category. He ran good businesses, paid his taxes, treated his employees well, gave back to the community, and still wound up a multi-millionaire.
There are other kinds of business leaders, though, as authors Scott Klinger and Holly Sklar point out in the Progressive Populist piece. Some of them who have been using loopholes and other gimmicks to hide their profits in tax havens like Bermuda and the Cayman Islands now are pushing Congress to pass a special tax holiday for "repatriating" their money back to the United States. They're calling their plan "Win America."
"There's nothing patriotic about this repatriation being pushed by Google, Cisco, Pfizer and other companies in the Win America campaign," the authors argue. "To sell the tax holiday, they claim it will produce a burst of jobs and investment. In fact, Congress passed a 'one-time-only' tax holiday in 2004 with similar promises. Instead, it produced a burst of shareholder dividends and stock buybacks, which goosed the pay of CEOs."
Klinger and Sklar explained that a favorite accounting trick of the giant corporations is transferring a patent from the U.S. parent company to a subsidiary — often called a shell company — in a tax haven.
"Profits from the patent go largely untaxed offshore while the costs of development, marketing and management remain in the U.S. where they are taken in tax deductions," the duo pointed out.
Consequently, a corporation like Pfizer, maker of Lipitor, Viagra and other hugely profitable drugs, reported $7.9 billion in U.S. losses while claiming $37.8 billion in profits in the rest of the world. And that doesn't even consider that Pfizer, like many of the pharmacy giants, is heavily subsidized by taxpayer-funded research at the National Institutes of Health.
"It should not be rewarded with another tax holiday," Klinger and Sklar argue.
But the real bottom line is that the taxes that these giants escape paying have to be made up by others.
"When powerful large U.S. corporations avoid their fair share of taxes, they undermine U.S. competitiveness, contribute to the national debt and shift more of the tax burden to domestic businesses, especially small businesses that create most of the new jobs," the authors note.
Their conclusion: "Real patriots pay their fair share of taxes. They don't run out on the bill."