All across corporate America, high-priced accountants are hard at work helping companies avoid billions in taxes by hiding profits in a host of tax sheltering schemes. No summer vacation at the beach reading trashy actuarial tables for these guys. And they're doing a bang-up job: Corporations are currently turning over 30 percent less of their profits to the taxman than they did 20 years ago.
Meanwhile, all across the country, state governments, facing the biggest budget crisis since the Great Depression, are being forced to slash programs and cut services.
Gee, do you think there might be a connection? You can bet your vanishing after-school care, prenatal health program, and local law enforcement service there is.
According to a new study released last week by the Multistate Tax Commission, a nonpartisan coalition of state taxing authorities, corporate tax shelters robbed states of $12.4 billion in desperately needed revenues in 2001 -- a figure that represents more than a third of the money corporations rightfully owed.
Companies sheltering their assets overseas are draining another $70 billion a year from the federal Treasury -- funds that often make their way back to states through programs such as Head Start and AmeriCorps.
But as damning as those statistics are, they're still just abstract figures. In order to really understand the devastating impact these lost revenues are having, we need to put flesh and bone to the numbers.
Take California: according to the Multistate Tax Commission, the Golden State lost an estimated $1.34 billion in corporate tax revenue because of tax shelters. Now that might not seem like that much money to a state facing an elephantine $38 billion budget deficit, but it means very specific cuts to very specific programs that affect hundreds of thousands of people.
For example, just $520 million of the $1.34 billion the tax dodgers kept for themselves would make it possible for the state to avoid the closure of -- or severe cost cutting at -- 250 to 350 nursing homes. Just $380 million would prevent the loss of childcare and daycare services for 429,000 children. And just $600 million would make it unnecessary to up the entry age for kindergartners -- a change that will keep 110,000 children from starting school in the fall. But because of the tax shelterers' greed, those dark clouds are gathering on the California horizon.
Chew on that for a second. Thanks to California's corporate tax cheats, thousands of elderly nursing home residents are facing the prospect of being tossed out on the street. Maybe the high-powered corporate numbers-crunchers can take a break from devising ways to bilk the taxman and figure out, pro bono, how the state's nursing home operators are supposed to cut corners and still protect the health and well being of those in their care. Feed their elderly charges less often? Substitute sugar pills for life-sustaining medication? Fill their oxygen tanks with helium?
And what about those 110,000 California kids who may have to put their education on hold for another year? What are we supposed to tell them: "Hey, who needs kindergarten when you've got Sponge Bob Squarepants"?
Need more evidence of the difference this lost revenue would make? Consider that just $18 million of the lost $1.34 billion (only 1.3 percent of the total skimmed) would allow California officials to fully fund the California Arts Council, the 27-year old agency that brings artists, writers, and performers into the state's public schools. Artists like poet Dana Lomax, who inspires low-income elementary school students to believe that "Imagination can take you anywhere" or actress Jill Holden, who conducts workshops at treatment centers for abused and neglected kids. Instead, the Arts Council is on the budget chopping block. Thanks corporate tax crooks!
And the same sort of pain being felt in California is being meted out all across the country, with beleaguered state legislatures forced to cut programs and eliminate services that could easily have been funded by lost revenues.
In Florida, which lost $554 million to tax shelters in 2001, just $7.7 million would have saved a program that provided glasses and hearing aids for low-income people.
In Oregon, which is dealing with $80 million in lost corporate taxes, $14.5 million would have prevented the 19,000-student Hillsboro school district from shutting its doors 17 days early this year.
In South Carolina, which also was denied $80 million because of tax shelters, a mere $1.4 million would have stopped the round of budget cuts that cost Traci Young Cooper, the state's 2001 Teacher of the Year, her job. The honor earned her a trip to the White House to meet President Bush; maybe if she knew what was coming she could have lobbied him to make all tax shelters illegal.
In Kentucky, which lost $150 million to tax shelters, $2.6 million would have allowed Gov. Paul Patton to leave behind bars the 883 prison inmates he released early in a desperate effort to balance the state's budget. I have a sneaking suspicion that the 25-year old woman who was raped by one of these freed inmates just three days after his release would consider that $2.6 million money very well spent.
And the list goes on and on. Vital programs and services cut or eliminated that could have been saved had corporate America just done the right thing and paid what it owed.
It's time for the IRS to stop coddling corporate crooks and start going after tax shelter thieves with a vengeance. To do any less is a slap in the face of all the hard working taxpayers who, however grudgingly, pay their fair share.
Wealthy corporations absolutely must be forced to do the same. Because in the end, it's not the big, bad taxman these corporate tax cheats are pulling a fast one on. It's you and me.
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