By Michael E. Miller
By Allie Conti
By David Villano
By Jose D. Duran
By Michael E. Miller
By Allie Conti
By Kyle Swenson
By Luther Campbell
A year ago, Citizens for Tax Justice, a Washington, D.C., nonprofit, studied the tax returns of 280 corporations. What it found was a Beltway version of a Mafia protection scheme.
From 2008 to 2010, at least 30 Fortune 500 companies — including PepsiCo, Verizon, Wells Fargo, and DuPont — paid more for lobbyists than they did in taxes. They collectively spent $476 million sucking up to Congress, buying protection for tax breaks, loopholes, and special subsidies.
It didn't matter that these same 30 firms brought home a staggering $164 billion in profit during that three-year period. They not only managed to avoid paying taxes. They actually received $10.6 billion in rebates.
Defenders of the system argue that most deductions don't go to large corporations. That's true. By pure dollars, the lion's share goess for mortgage interest, employer-paid health insurance, retirement plans, and Medicare benefits.
The difference is these tend to benefit everyone. They're designed for the greater good, reinforcing the pillars of self-determination: homeownership, savings, and health care.
But there's another part of the tax code where 99 percent of America is barred from entry. It's where Congress sells loopholes and subsidies to those with the wallets to pay. They not only screw the rest of the country — which is forced to cover the tab — but turn any notion of a free market into situational comedy.
Even for companies within the same industry, the disparities are alarming. From 2008 to 2010, UPS paid a tax rate of 24 percent of its profits. Rival FedEx paid less than 1 percent.
Monsanto managed to pay 22 percent — well below the supposed corporate rate of 35 percent. But that's nothing compared to DuPont, which received a $72 million rebate — despite profits of $2.1 billion.
You don't need a Wharton MBA to see how damaging this is to the nation's financial health. Big companies are given incentive to lard up on lobbyists, accountants, and lawyers, rather than use that money to improve products and services. And while small businesses may collectively be our largest and most stable employer, we've rigged the game against them, since they can't afford to buy congressmen of their own.
"The tax code is a mess," says Congressman Chris Van Hollen (D-Maryland). "I support tax reform but not reform that's simply a Trojan horse for giving another round of windfall tax breaks to the very wealthy."
And that's the problem. President Obama and Democrats have railed for years over this brand of favoritism, only to cave like the French army at the first whiff of resistance.
Republicans are worse, prattling on about free markets while protecting just about any market-distorting loophole if the money's right. Mitt Romney, the poster child of offshore tax schemes during his time at Bain Capital, claims he has a plan to close loopholes. He just refuses to say how he'll do it.
But if you're not being bought with weekend golf retreats at Augusta National, it's easy to find giveaways we can all agree must end. Introducing the ten most corrupt breaks, designed to do nothing but pervert America's economic strength:
10. I'm Irish. No, really.
How? By pretending to be Irish.
In the late 1980s, Apple decided that Ireland's 12.5 percent corporate tax rate was a much more comely figure than America's 35. But Steve Jobs didn't want to move to Dublin. Fortunately, Congress allowed him to fake it.
Apple created an Irish subsidiary. Then, with a flourish of paperwork, it transferred its most valuable assets — its patents — to Ireland, comically forcing its U.S. headquarters to pay leasing fees for its own inventions.
Nothing had actually changed in the way the company operated. Apple simply had new paperwork saying it was partial to warm beer and fiddles, allowing it to dodge a substantial part of its U.S. tax bill.
But that wasn't the end of the scam. The Irish subsidiary is partially owned by another company, Baldwin Holdings, which doesn't even publicly list an office address or a phone number. But it does have paperwork saying it's headquartered in the Virgin Islands, where it can stockpile its income tax-free, outside the reach of the IRS.
Most people associate such exhaustive money laundering with drug cartels. But it's now standard practice at firms like Eli Lilly, Google, Microsoft, Pfizer, and Facebook. The only difference is that when drug dealers do it, the government shows up with Kevlar and automatic weapons instead of a refund check.
Congress, meanwhile, is paid to look the other way, leaving the federal treasury open to serial molestation by our most prominent citizens.
"The original sin is that we treat a wholly owned subsidiary in the Cayman Islands as if it was an arm's-length separate entity," says Dr. Calvin Johnson, a tax expert at the University of Texas Law School. "A pocket transfer from the U.S. to the Cayman Islands is like a transfer from your left pocket to your right. Any system that treats a Cayman Island subsidiary as if it is a separate entity is just asking to be destroyed."
these major corporations pay lobbyists more than what they pay in taxes These corporations, these corporations that make billions of dollars pay more to lobbyists than what they pay in taxes. And maybe one of the reasons mitt has that problem is because, when did our ill-fortunes start? Romney himself has greatly benefited from the tax code. Romney greatly benefited from the current tax rate for capital gains, which is 15 percent compared to the 35 percent tax rate for wage-based income. If Romney had made his $21.6 million in wages in 2010 he would have been forced to pay $7.56 million dollars. Because his income came from capital gains, Romney instead only paid $3 million in taxes
@Anthonyvop1 I'm not defending Obama, but the Solyndra fiasco started at the end of G. W. Bush's presidential term. Look it up.