When A ‘Tax Bonanza’ Is Actually A Huge Corporate Tax Break
There is a push underway for a huge corporate tax break from the next administration. Multinational corporations owe more than $720 billion in taxes on profits stashed in tax havens. They are proposing to bring those profits back if the government lets them pay only a fraction of what’s owed. This is being sold as a “tax bonanza” to pay for infrastructure. Actually it’s a “tax-break bonanza” for corporations. Don’t be bamboozled.
Bloomberg Politics has a story today, Clinton Readies Post-Election Push on Highways, Corporate Taxes:
Clinton says on her website that in her first 100 days as president she’ll seek approval of the “biggest investment in American infrastructure in decades,” creating tens of thousands of jobs. Gene Sperling, a Clinton economic adviser, said that a $275 billion infrastructure plan would be among her top three domestic priorities at a forum this month sponsored by the National Association for Business Economics.
This is absolutely the right thing to do and would get her Presidency off to a great start. We badly need to repair our aging infrastructure, because the economy could use it and because of all the jobs is create. Good for Clinton. (Of course, the need is much, much more than $275 billion. The American Society of Civil Engineers’ (ASCE) Infrastructure Report Card estimated in 2013 that we need to spend $3.6 trillion just to get things back in shape, never mind modernized.)
$275 billion is an excellent down-payment on the problem. Where does the $275 billion come from?
Clinton has said she would finance infrastructure spending through unspecified “business tax reform.” Incoming Senate Democratic Leader Chuck Schumer of New York said on CNBC Oct. 18 that the money would come from a lower tax rate on profits stashed overseas by U.S. corporations. Other Democrats close to the Clinton camp said they anticipate she would adopt the Schumer approach.
Uh oh. The “Schumer approach?”
The lower tax rate would produce a one-time bonanza as companies brought home an estimated $2.5 trillion stockpiled abroad. Obama proposed an infrastructure plan financed by a one-time 14 percent tax rate on overseas profits returned to the U.S. instead of the current 35 percent maximum rate. Congressional Republicans previously proposed an 8.75 percent rate on repatriated cash.
Goldman Sachs Group Inc. said in a recent report that Obama’s plan would have yielded at least $240 billion for the government to spend.
Wait. Back up. These corporations owe more than $720 billion in taxes. What’s this “one-time 14 percent tax rate”? The corporate tax rate is 35 percent (it was reduced from 52% in 1983, hence budget deficits…) and 35% is what all the companies that didn’t dodge their taxes paid. Why do these tax-dodgers get to pay only 14%?
Shouldn’t the tax-dodging corporations pay what they owe, and pay a fine for tax-dodging, not get a huge tax break?
Which Is Better For We, the People? $240 Billion Or $720 Billion?
Collecting $240 billion when they owe more than $720 billion is not a “tax bonanza” in any way, shape or form. It is a huge, giant tax break for the giant corporations that dodged their taxes. Here is a word problem: How much money is $720 billion minus $240 billion? (Hint: this would had $480 billion cash to corporations as a reward for dodging their taxes while other corporations paid what they owe.)
Here is a “word problem” for you: Which of the following is more for We the People to do things like repair our infrastructure, pay for teachers, provide free college and health car and child care and meals for the elderly — $720 billion or $240 billion? (Hint, $720 billion is more than $240 billion.)
Closing the loophole that lets these companies get away with stashing profits in tax shelters and collecting the $720 billion they owe — and another $90-$100 billion every year thereafter — would be a tax bonanza.
We Can Stop This
We can stop this. Clinton herself has not said she favors this. Assuming Clinton wins, the incoming administration is not going to want to be seen as selling out to corporations. That’s why this is being sold as a “tax bonanza” instead of a huge tax break.
Get the word out; explain how this scheme is really just a tax bamboozle and a huge giveaway to the very corporations that scammed on us and used their power and influence to dodge their taxes. Let members of Congress know that we’re watching and We the People want our $720 billion and want this tax-dodge, tax-haven loophole closed, period.
Make these tax-dodging corporations pay the taxes they owe. They don’t deserve a huge tax break, they deserve a huge fine. Simple as that.