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Today's Top News
Stop the Offshore Piracy
Ships laden with tens of millions of dollars of American treasure pull into beautiful ports in places like the Cayman Islands and the Bahamas every day, offloading profits made on sales to U.S. consumers. These voyages -- all technically legal -- cost taxpayers $100 billion a year.
Now the corporate captains of these pirate ships have sent Congress an ominous ransom note that says: "Allow us to return these profits to American territory at a deeply discounted tax rate of 5.25 percent, or you'll never see your cash again."
The regular corporate tax rate is 35 percent.
Of course, modern pirates don't need cargo ships. They transmit booty instantaneously via electronic bits to satellite dishes that link the world's 50 tax havens. There, shell-company subsidiaries, often little more than a brass plate on the wall and a post office box, handle the transaction. Ugland House, a non-descript five-story building on Grand Cayman Island, houses nearly 19,000 subsidiaries of the world's largest businesses.
American corporations have stashed more than $1.4 trillion offshore. Much of this loot is reaped from accounting tricks.
Corporate pirates have formed an armada to lobby Congress for the same tax break they got in 2004. That was when they promised to create jobs in exchange for a one-time tax break on repatriated earnings they would return to the United States from abroad.
The sea air must have clouded their memories, for the coalition that calls itself WIN America, is calling for a second "one-time" tax cut, only this time they've made no attempt to promise U.S. jobs or investment. Instead, they're seeking public sympathy for having their profits unfairly trapped offshore. The profits are indeed trapped -- by the greed of corporate leaders eager to deliver every last dime of profits to shareholders. The U.S. tax code isn't to blame.
According to a new Institute for Policy Studies report, "America Loses: Corporations that Take 'Tax Holidays' Slash Jobs," which I co-authored, 58 U.S. corporations that enjoyed 70 percent of the tax breaks from the 2004 tax holiday eliminated nearly 600,000 jobs in the seven years that followed.
Three of the five WIN America companies that break out their U.S. employment data reported that they destroyed more than 25,000 American jobs between 2004 and 2010. Seven of the 18 WIN America members slashed more than 100,000 jobs from global workforces.
The pirates named their lobbying effort WIN America, as if avoiding taxes by shipping profits offshore was somehow patriotic. WIN America has spent $50 million on lobbyists to coax Congress into supporting a repeat of a well-documented policy failure.
Congress should put an end to the piracy that continues to ship U.S. profits abroad to avoid U.S. federal taxes. There's already a bill in Congress to do just that. The Stop Tax Haven Abuse Act would outlaw the fake businesses. It would block the money earned in America from leaving here in the first place.
Tax-dodging corporate pirates shouldn't force U.S. taxpayers and workers to walk the plank.