Tax Rates Down, Havens Thriving: Corporations Win, Workers Pay

Despite tough talk, corporations receiving increasingly friendly treatment from governments as working people carry the burden

When it comes to taxes, the corporations are winning and working people are losing. Big time.

"When American companies use offshore tax havens to shirk their tax bill, ordinary taxpayers and small businesses are forced to pick up the tab through cuts to public programs, higher taxes, or more debt."

Despite tough talk by European Union governments, US politicians, and numerous commissions and experts who have looked at the billions of potential tax dollars diverted through countries with more corporate-friendly rates or hidden in offshore havens, new reporting by Bloomberg shows that the policies and rates themselves continue to favor corporations while the burden of revenue shortfalls continue to be put on the backs of working people on both sides of the Atlantic.

From Bloomberg:

As politicians in Europe and the U.S. talk tough on corporate tax dodging, several of their governments are helping multinationals lower tax bills. They have been cutting corporate rates, introducing laws that encourage tax avoidance, and rejecting proposals to close loopholes. Even amid growing public outrage in Europe against austerity policies, the gulf between rhetoric and reality on taxation means individuals rather than businesses are often bearing the brunt of higher taxes.

'Avoidance Game'

At a time when unemployment in the European Union is at record levels, nations eager for jobs remain hesitant to alienate multinational companies by raising their taxes. Instead, countries such as Spain, Greece, and Hungary have imposed hefty sales tax increases, a hit borne most severely by poor people.

"I am skeptical whether the different countries have the political courage to take on the corporate tax avoidance game," said Sven Giegold, a member of the EU parliament from Germany's Green Party. "You need consensus of the participating partners, and I do not see the leadership to force through a global model."

In a joint press conference at the White House on Monday, British Prime Minister David Cameron made it a point to say that he and President Obama made international tax policy a focus of their morning discussion.

However, Bloomberg points out that the UK has been one of the country's that has continually talked loudly about tax reform in Europe--closing loopholes, adding transparency, etc.--but has simultaneously lowered rates and rewritten policies that will make it easier for British firms to take advantage of nations with friendlier tax policies.

"Beginning last month," Bloomberg notes in addition, "the U.K. slashed the tax rate to 10 percent from the regular 23 percent rate on profit attributed to patents and intellectual property to lure research and technology jobs."

In the US, a recent report by the Government Accountability Office (GAO) showed that U.S. companies received tax breaks worth around 181 billion dollars in 2011, slightly more than what they paid in taxes.

Despite that, the calls in Washington continue to be for lower, not higher, corporate rates. That, of course, is despite the fact that most Americans think that corporate loopholes and low rates for the nation's wealthiest private corporations are simply unfair, given the disproportionate and growing burden they put on regular working people. When asked, many think stronger rules are needed to curb what they see as abuse of a system that has long been too friendly to multinationals.

As Inter Press Service recently reported: "According to recent polls, around 80 percent of the U.S. public and 85 percent of small-business owners support strengthened tax regulations that would make it far harder for corporations to exploit offshore tax havens."

"We can't ignore corporate tax-dodging antics. Contrary to the scare tactics of tax-dodging corporations, by eliminating any incentives to locate subsidiaries overseas, closing loopholes will effectively keep jobs here in America," said Dan Smith, Tax and Budget Advocate for U.S. PIRG, which has examined the situation deeply.

"When American companies use offshore tax havens to shirk their tax bill, ordinary taxpayers and small businesses are forced to pick up the tab through cuts to public programs, higher taxes, or more debt. That's not acceptable."

___________________________________________________________

Join Us: News for people demanding a better world


Common Dreams is powered by optimists who believe in the power of informed and engaged citizens to ignite and enact change to make the world a better place.

We're hundreds of thousands strong, but every single supporter makes the difference.

Your contribution supports this bold media model—free, independent, and dedicated to reporting the facts every day. Stand with us in the fight for economic equality, social justice, human rights, and a more sustainable future. As a people-powered nonprofit news outlet, we cover the issues the corporate media never will. Join with us today!

Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.