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Are You With America or the Cayman Islands
09 February 13
hen
the greed, recklessness, and illegal behavior on Wall Street drove this
country into the deepest recession since the 1930s, the largest
financial institutions in the United States took every advantage of
being American. They just loved their country - and the willingness of
the American people to provide them with the largest bailout in world
history. In 2008, Congress approved a $700 billion gift to Wall Street.
Another $16 trillion in virtually zero interest loans and other
financial assistance came from the Federal Reserve. America. What a
great country.
But just two years later, as soon as these giant
financial institutions started making record-breaking profits again,
they suddenly lost their love for their native country. At a time when
the nation was suffering from a huge deficit, largely created by the
recession that Wall Street caused, the major financial institutions did
everything they could to avoid paying American taxes by establishing
shell corporations in the Cayman Islands and other tax havens.
In 2010, Bank of America set up more than 200
subsidiaries in the Cayman Islands (which has a corporate tax rate of
0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of
America pay nothing in federal income taxes, but it received a rebate
from the IRS worth $1.9 billion that year. They are not alone. In 2010,
JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax
havens to avoid paying some $4.9 billion in U.S. taxes. That same year
Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid
an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal
income taxes for the last four years after receiving a total of $2.5
trillion in financial assistance from the Federal Reserve during the
financial crisis.
On and on it goes. Wall Street banks and large
companies love America when they need corporate welfare. But when it
comes to paying American taxes or American wages, they want nothing to
do with this country. That has got to change.
Offshore tax abuse is not just limited to Wall Street.
Each and every year corporations and the wealthy are avoiding more than
$100 billion in U.S. taxes by sheltering their income offshore.
Pharmaceutical companies like Eli Lilly and Pfizer
have fought to make it illegal for the American people to buy cheaper
prescription drugs from Canada and Europe. But, during tax season, Eli
Lilly and Pfizer shift drug patents and profits to the Netherlands and
other offshore tax havens to avoid paying U.S. taxes.
Apple wants all of the advantages of being an American
company, but it doesn't want to pay American taxes or American wages.
It creates the iPad, the iPhone, the iPod, and iTunes in the United
States, but manufactures most of its products in China so it doesn't
have to pay American wages. Then it shifts most of its profits to
Ireland, Luxembourg, the British Virgin Islands and other tax havens to
avoid paying U.S. taxes. Without such maneuvers, Apple's federal tax
bill in the United States would have been $2.4 billion higher in 2011.
Offshore tax schemes have become so absurd that one
five-story office building in the Cayman Islands is now the "home" to
more than 18,000 corporations.
This tax avoidance does not just reduce the revenue
that we need to pay for education, healthcare, roads, and environmental
protection, it is also costing us millions of American jobs. Today,
companies are using these same tax schemes to lower their tax bills by
shipping American jobs and factories abroad. These tax breaks have
contributed to the loss of more than 5 million U.S. manufacturing jobs
and the closure of more than 56,000 factories since 2000. That also has
got to change.
At a time when we have a $16.5 trillion national debt;
at a time when roughly one-quarter of the largest corporations in
America are paying no federal income taxes; and at a time when corporate
profits are at an all-time high; it is past time for Wall Street and
corporate America to pay their fair share.
That's what the Corporate Tax Dodging Prevention Act
(S.250) that I have introduced with Rep. Jan Schakowsky (D-Ill.) is all
about.
This legislation will stop profitable Wall Street
banks and corporations from sheltering profits in the Cayman Islands and
other tax havens to avoid paying U.S. taxes. It will also stop
rewarding companies that ship jobs and factories overseas with tax
breaks. The Joint Committee on Taxation has estimated in the past that
the provisions in this bill will raise more than $590 billion in revenue
over the next decade.
As Congress debates deficit reduction, it is clear
that we must raise significant new revenue. At 15.8 percent of GDP,
federal revenue is at almost the lowest point in 60 years. Our
Republican colleagues want to balance the budget on the backs of the
elderly, the sick, the children, the veterans and the most vulnerable by
making massive cuts. At a time when the middle class already is
disappearing, that is not only a grossly immoral position, it is bad
economics.
We have a much better idea. Wall Street and the
largest corporations in the country must begin to pay their fair share
of taxes. They must not be able to continue hiding their profits
offshore and shipping American jobs overseas to avoid taxes.
Here's the simple truth. You can't be an American
company only when you want a massive bailout from the American people.
You have also got to be an American company, and pay your fair share of
taxes, as we struggle with the deficit and adequate funding for the
needs of the American people. If Wall Street and corporate America don't
agree, the next time they need a bailout let them go to the Cayman
Islands, let them go to Bermuda, let them go to the Bahamas and let them
ask those countries for corporate welfare.
Reader Supported News is the Publication of Origin for
this work. Permission to republish is freely granted with credit and a
link back to Reader Supported News.
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