Thursday, October 21, 2010

Why is the deficit so big? It could be because billion dollar companies are robbing the U.S. Treasury blind.

One of the reasons you and I and other ordinary American citizens are taxed so much and still live in a country with a huge Federal deficit is because multi-billion dollar American corporations are taxed so little.


They move money around — around Europe and the Caribbean — to make their tax liabilities disappear.

According to Bloomberg news, Google and other U.S. corporations are ripping off the taxpayer to the tune of $60 billion. Now Facebook is about to follow. And there are still others.

The Tea Party and Republican wingnut solution is to cut or eliminate Social Security and Medicare, Federal payments to the states, money for infrastructure and everything else that once made America work.

The smarter solution would be to cut the tax loopholes that let the big corporate thieves get away with this stuff. But Republicans in Congress won't let it happen. If you want to get mad as hell at something, get mad as hell at that.

P.S. An earlier version of this post contained an error attributing the whole $60 billion to Google. That has been corrected. Thank you to those who pointed it out. However, no thanks to those fearful (or furious) souls who declare that if the American people try to collect what they're owed by the corporations, the corporations will leave the country. That's like saying, "If we try to stop that band of bandits, they'll burn down our village and rape our women." I agree the corporations will try to leave the country, just as so many have moved their manufacturing plants out of the country and thrown Americans out of jobs so the factories can pay paupers' wages. So I'm glad you brought the matter iup. We can stop this.

We need to urge Congress to pass criminal laws that would fine companies the equivalent of the wages and taxes they escape by moving overseas. If they want to sell goods here, or do business here, they can employ Americans and pay American taxes here. You say they'll stop doing business in this huge market if we try. Fine. I can guarantee you that some entrepreneurial (and honest) Americans will rush in to fill the vacuum.

But...but...but the right-wingnuts will complain that if companies pay American wages and pay American taxes, prices in America would go up. I agree. That's the price we pay for full employment and a growing economy, rather than unemployment and a dying economy. Which would you rather: Have a job or pay an extra dime for a bag of carrots? (I can hardly wait for some genius to do the math and tell me it's not a dime, it's 17 cents.)

P.P.S. My policy is to allow any post that is not libelous or outrageously, formidably obscene. However, I do screen for those things, and I only do so once or twice a day. So if you don't find your post here for a while, be patient. It'll show up. Probably.

53 comments:

Anonymous said...

If you read the article carefully, you will notice that it deals with Google's international tax liability not U.S. tax liability.

Anonymous said...

The article states that Google has cut its taxes by 3.1 billion over the past 3 years. The 60 billion figure is for all corporations using the same income shifting technique. Your link made it sound like Google was singlehandedly responsible for the entire 60 billion sum.

kiapura said...

The ignorance of the majority of people is astounding.

There is nothing worthy of more sadness than watching businesses with lots of money be taxed less than large populations of people with much less.

Republican.. Democrat.. it just doesn't matter. Ignorance of the majority is self-destructive to us all.

Anonymous said...

If you think it's just the Republicans who are party to that game, think again. Corporate influence in politics is obviously the biggest single thing hurting this nation--we let the corporations buy the votes and therefore the corporations call the shots--and yet nobody, not a single politician in Washington, is seriously addressing that.

Florian said...

I'm not for higher taxes or cutting off services etc. But I need to point out that if you simply move to tax global companies more, they'll move elsewhere entirely.

Do you think google would think twice about closing its googleplex at Mountainview when it would mean savings to the tune of $60 billion?

Anonymous said...

But if we close the tax loopholes, won't that mean that those companies will cease to operate in America entirely? It won't be worth it at that point for them to remain here. So instead of laying off millions of workers, they'll lay off ALL the workers. Thanks.

Anonymous said...

Don't blame large companies for this problem. The government is robbing you blind.

America spent $663 BILLION dollars on the military in 2009, and that's essentially wasted money, because the tanks and weapons have very little practical use elsewhere (and the jets must cost a lot to maintain).

It would be better for the US to simply tax wealthy citizens more.

Anonymous said...

ya its the evil corps that are bad and Big Governments there to protect us lol where is elliot spitzer when you need him , oh wait never mind (Steve from OKC)

Anonymous said...

You are mistaken, the total amount across all corporations is to the tune of 60 billion dollars. Google contribution to that is only about 1 billion per year. Thank you for only reading the heading of article and not examining the content.

Anonymous said...

Did you read the article about Google? Google isn't doing $60 billion by itself... "Such income shifting costs the U.S. government as much as $60 billion in annual revenue" meaning it's all companies utilizing transfer pricing put together.

Anonymous said...

actually the deficit is due to the fractional reserve banking practices of the Federal Reserve System. If the government gives away its authority to print its own currency to a privately owned corporation/central bank called the "Federal" "Reserve"(its not a part of our federal government, and has no reserves), and you have to borrow every dollar just to bring it into existence. Then debt is the only possible result, regardless of what ANYBODY does. google "The Money Masters" and watch the whole thing.

MaurceiH said...

Uh, right.
So those companies will simply move their offices off shore.
Like many have already done.
Grand Cayman is really nice in December.
For instance:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aAKluP7yIwJY

Anonymous said...

Re-read the article you posted, Google isn't responsible for the entire 60 billion dollars, that's the sum of all companies.

Anonymous said...

"The smarter solution would be to cut the tax loopholes that let the big corporate thieves get away with this stuff."

So minimizing the amount of money the government steals from your company makes YOU the thief..... these new maths are fun.

Anonymous said...

Don't forget all the wasteful spending!

http://bit.ly/d7Hde8

Mike said...

Google "is ripping off the taxpayer to the tune of" $3 billion, not $60 billion. The latter is more than double their annual revenue, which would be a bit insane.

At %2000, that's kind of a big mistake, considering that the correct number is in the very first line of the linked article.

Anonymous said...

Classic liberal thinking. America taxes money earned in the US as well as money earned abroad. Other countries do not. It is in Googles best interest to not bring that money back into the US. Do you order online to save tax? Cross the state line becuase it is cheaper? How about buying school supplies on "no sales tax day"? Live in any of the states that have no sales tax. Well by your logic you are robbing the treasury blind.

Change the tax code over to the Fair Tax and that 60 Billion will come back to the US where it will be spent and taxed or invested. It will also get every other company in the world moving to set up headquarters in the US.

Anonymous said...

the money has to belong to the government before anyone can rob them. unless we are all slaves at the mercy of the feds, the money they earned belonged to those which earned it, and them alone, for shareholders, astronomical ceo salaries, or to sit around and burn if they want. You don't have any right to it, I don't have any right to it. You want to do something about the deficit? Start saving money by not murdering brown people.

Anonymous said...

Not to take away from your larger point, but according to the article Google avoided only (heh) $3.1 billion in taxes in the last three years, or a little over $1 billion/year.

$60 billion/year is the estimated total impact of this technique being used by all companies with a U.S. footprint.

Still, I don't know how Republicans are allowed to skip over things like this to continue their attack on the social safety net.

Anonymous said...

*Sigh* Yet another case of an angry rant about a headline without actually reading the article. Google only moved $3.1 billion of *foreign* revenue via these techniques, which are *perfectly* legal.

In fact, the reason why most companies do this is because that revenue would be taxed twice under US law - once abroad, and again here. Would you like to pay double taxes on all your foreign sales if you were a multinational company?

Anonymous said...

to be fair, this article states that the taxpayers google is "ripping off" are countries other than the USA. This (legal) tax scheme they are using is to minimize their tax exposure for the business they do internationally and not in the USA.

Anonymous said...

You have no idea how economics work. Instead of getting the taxes we do get from these companies, they would then move entirely overseas, also removing all of the jobs they provide.

If you want to get mad as hell about something, get mad as hell about people getting mad as hell about things they don't actually understand.

Anonymous said...

Fuck yeah. I'm so sick of Republican drones telling me that the U.S. has the highest tax rate in the world. Our corporations don't pay shit in taxes if they know what they are doing. It's the LOOPHOLES, not the RATE.

Anonymous said...

Why not just stop taxing corporations, and while we are at it we should stop giving them the same rights as people, and raise the taxes on the people who profit most from these corporations.

Lynnehs said...

I agree completely. For the people who say if we enforce the tax laws and make these companies pay what they owe they'll just move overseas entirely -- no way. Nobody spends like the American consumer. Do you think people in India are really going to buy as much stuff as we do? They need us to increase sales.

By the way, I've also written about this issue from time to time on my blog. Just click on my name to see.

Anonymous said...

Most of you don't realize that business taxes are illusory in nature. Corporations don't pay taxes: people do, whether they be shareholders or consumers. A tax hike on businesses will be passed on to consumers, leaving the profits the same. A solution like the Fair Tax (www.fairtax.org) would be good for both consumers and businesses alike.

sess56 said...

A species that preys on itself is only capable of self-destruction, just like us.

disko said...

global companies are going to leave the planet if we start taxing them. yay.

bullsballs said...

We need to resume using some older laws.
Like using tariffs on products made out of the country.
Sure, it raises the price to the consumer, but why move out of the country if it is going to cost the same or more to import junk...
We also need to repeal laws stifling little start up companies from being able to get started. Big companies have lobbied for these laws to prevent competition, and have to go!
If companies are importing goods, and are based outside of the country, then they should be limited as to how much money they can take out of the country...
Our government has to stop spending over three trillion dollars in four years!
Bottom line is, if the majority of Americans are poor, who is going to buy the junk? The jobs and wealth have to stay here, and it is the job of the government to prevent what has happened, but it will never stop as long as people keep voting for an R or D... Vote the same, get the same...

Anonymous said...

You blame the republicans, but forget to mention that the dems have total control of the government. They could do whatever they wanted without a single republican vote....

Anonymous said...

who controls the house, senate, and white house right now? that's right, the dems. they could have closed any loopholes when they had the super-majority. but noooo, they chose not to. this is a *washington* problem, and not a *gop* problem. but you're too "EVIL GOP OH NOES !!1!" to get it. so we the taxpayers continue to take in the shorts. so much for "change," idiot...

Anonymous said...

Year Total Revenue-fed
1995 1351.93
1996 1453.18
1997 1579.42
1998 1721.96
1999 1827.64
2000 2025.46
2001 1991.43
2002 1853.40
2003 1782.53
2004 1880.28
2005 2153.86
2006 2407.25
2007 2568.00
2008 2524.00
2009 2105.00
2010 2165.12

The government does not have a revenue problem, they have a spending problem.

Anonymous said...

Wealth isn't a zero sum game you dumbass. those "thieves" you talk about are out creating jobs and investing in business with their hard earned money. Get a fucking education you stupid fuck. The only "thieves" in this scenario are the pukes in Washington confiscating every dollar they can get their hands on to pay off their supporters so they can stay in power.

Anonymous said...

Yes you are correct, it is all the republican's fault that this is happening. With a majority in the house and senate, plus a presidential vote, there is absolutely nothing the democrats can do to amend the tax law and get rid of this loophole.

It is all the republican's fault. Mostly George Bush.

The Fast Food Critic said...

I say tax them until they leave, then tax all there property here until they sell it. The U.S. has enough resources and man power that we don't need these greedy slave drivers controlling our society for there benefit.

Anonymous said...

Companies/corporations do not really pay taxes. They collect money from customers to pass on to the government. INDIVIDUALS pay taxes. Any increase in what corporations pay is a cost that is simply passed on to the consumer.
The REAL problem is spending. It is not a Democrat or Republican problem, but a problem of almost every politician that goes to DC.

If spending were actually controlled, and the money not thrown around like confetti because it is not their money (the politicians), we could actually lower taxes for the 50% of Americans that actually pay taxes.

Tom said...

1. Businesses do not pay taxes.
2. Businesses have never paid taxes.
3 Businesses will never pay taxes.
Business taxes are politicians admitting that individuals are overtaxed already, the safest way to hide additional taxes is by taxing corporations, which do not ever pay taxes. To a business, taxes and costs of compliance are expenses passed along to consumers in the form of higher prices, less quality, or lower quantity per dollar. Employees also see lower wages, and lesser benefit packages, shareholders see reduced returns, and, lastly, the owner gets a little less profit.
Any polititian who calls for any business taxes is ignorant, lying, or just can't stand the idea of you keeping more of the money you bust you rear for.
www.lp.org Vote Libertarian

Anonymous said...

But if the rich have all the money, they'll give us jobs!

Anonymous said...

Someone above hit the nail on the head regarding our deficits. We can blame almost all of it on Fractional Reserve Banking. Once we went off the gold standard in 1973, it allowed banks to create 9 dollars out of thin air for every dollar it holds in reserves. This is the primary reason for inflation and the deficits that results from inflation. Fractional Reserve banking is very real, yet no one really knows about it. Google it and you will see. I think that this would be a more proper focus of your article. The corporate tax rate on qualified net revenues is about 40%.

Anonymous said...

i dont understand why liberals want to deny the poor (ie, Indians) from having good jobs.

a better solution would be to join up American and Indian labor unions,and start unionizing IT and call center workers globally, just as corporations have become global.

also i know they are 'loopholes' but they exist because US corporate taxes are alot higher than in other countries... yes even socialist countries that have free health care.

but besides that, companies like google are truly small potatos. the biggest loophole are SPVs like the collateralized debt obligations, especially the synthetic ones... but those arent just big companies, they are pension funds and university endowments and towns and..well, you and me.

the size of the CDO market was several hundred billion, plus synthetics and we are looking at trillions, most of it secret (shadow banking system). attacking google is kind of missing the point.

google at least contributes to society. which is debatable as far as the thousands of anonymous hedge funds buying credit default swaps against mortgage securities and putting them in the cayman islands.

thanks

Anonymous said...

Others have pointed out this is the income companies earned on foreign operations. In general, I'd prefer to let companies just bring that back untaxed rather than park it in the Caymans. It's not coming back as it is, I'd rather have a small slice of a big pie than no slice at all.

That being said, some companies used questionable accounting to artificially boost their foreign earnings (e.g. sell the foreign subsidiary a widget for $1, which gets resold for 1000 euros). I'm also all for closing that sort of loophole, assuming it hasn't already.

Matt said...

The Google article deals with income earned outside of the US. Google pays taxes on income earned within the US. Google's effective taxrate is 22.4% when you include US taxes, which is not that low. Only foreign revenue is taxed at 2.4%. Even if it was taxed at 50% the US wouldnt see that taxable income until it is repatriated. The article seems to imply that Google somehow swindled the IRS when it transferred it's license to it's Irish sub. In reality, the APA process entails Google opening it's books to the IRS and negotiating a fair transfer price. They really couldn't have done anything more open and conservative as far as the IRS is concerned.

Zzarchov said...

All of the posts about how wrong it is to try and force the corporations to pay taxes locally would have a valid point if you were also for letting American citizens do the same thing.

Why should a corporation pay 0.5% but a citizen pay the full amount?

If you think taxes are too high, make them equally low for everyone. But then who will pay for all the services the corporations need to consume to operate? (Ie, infrastructure, education for a workforce, etc).

Anonymous said...

Our corporations don't pay shit in taxes if they know what they are doing.

Not true, Google paid something like 20% and Apple was closer to 30%. Maybe you think that wasn't enough, but it's clearly not zero.

As an aside, no one should be allowed to say "X doesn't pay their fair share" without first defining what "fair" would be. With numbers, not handwaving. Given a $13 trillion GDP and $3 trillion federal budget, I think "fair" means "everyone pays 25% of their gross income" (which turns out to be an increase for me).

Anonymous said...

Great post. Please remind President Obama that he promised to exactly what you suggested. I guess he must have forgotten it with all the chaos from the mad rush to socialize everything and all.

I notice he's been stumping on this platform again, and again blaming the "wingnuts," so be sure to send him the URL to your blog post right away. Otherwise, he could easily forget again with all the cap-and-trade and other "reforms" he wants to take up after the elections.

Anonymous said...

Apparently the author is overlooking the fact that the Democrats are in control of all three branches of government currently. IF they Dem's wanted to close the loopholes, why haven't they? They could and the republicans couldn't do a thing about it. Likely Answer, Dems get as much money from those same companies as republicans. After all, where do you think Soros keeps all his money? In a US bank? Hardly.

Anonymous said...

The CEO from Google is one of the biggest Dems out there. Google is anything but a Repub. They actually are very liberal. How ironic. The people who blame the problem on companies are the same people who give millions to dem causes and promote liberals with the most widely used search engine in the english speaking world.

Anonymous said...

Every single politician has an agenda whether they're a democrat or a republican. Mostly that agenda is the same as a television news channel. Stay in business.

To stay in business, each of them make promises to different groups. The dems make promises to the lower middle class and poor, and the repubs make promises to the upper middle class and wealthy. Neither group actually wants to keep those promises, especially when keeping them would eliminate their chosen groups need for them.

What I'm saying is, don't buy any of the crap you hear from any politician, or news outlet shilling for a party, or blog for that matter. It's all a bunch of BS.

The only way we're going to fix this country is if we eliminate politicians who only want to stay in their jobs. We need people to run for office who don't actually want the job, people who will sacrifice 4-6 years of their lives to do a job that needs to be done and then go back to their medical practice, or farm, people who don't listen to lobbyists and vote what their conscience tells them is right instead of what will make them popular or get them the most kick-backs.

There are very few of these people left and they don't usually run for office.

It makes me sad for my country when I see the masses so fooled by their "leaders" into thinking that any of them have anyone's best interest but their own in mind.

Anonymous said...

You have to give it to libs with their redefining of the english language.

Paying less taxes is theft.

Using legal means to reduce tax burden is taking advantage of loopholes.

Bringing in less tax revenue is a cost.

How soon until the liberals come after responsible people (thieves) who are reducing tax burden now and in the future (loopholes) by investing in 401ks and roths causing the government to get less tax revenue (cost)

Anonymous said...

absolutely true BUT google is way behind the power curve. Most big multinational corporations pay little or no tax at all and haven't for decades. they all make their money in the U.S. but move their corporate headquarters offshore or to Dubai, because they pay no income tax. All the ceo's take their salary in stock because then they don't pay income tax, they pay capital gains which is taxed at like 6% for most of them. The tax code is almost completely written by lawyers from big corporations and handed to congress to pass, loopholes included. That's why I've always been a big proponent of a no deduction, no loophole, flat tax. All individuals pay 20%, all corps pay 10%. You could eliminate like 90% of the IRS and if all those trillions of corp. dollars actually got paid for a change, we'd be out of debt in no time, instead of hanging it around the neck of the middle class. Exxon made 45 BILLION last year, Chevron - 26 billion, Conoco Phillips - 23 billion. That's just 3 oil companies accounting for almost a 100 billion dollars in revenues in one year. That's, 94 billion which looks like:
$94,000,000,000.00

http://www.reuters.com/article/idUSN1249465620080812

http://www.pagetutor.com/trillion/index.html

Anonymous said...

Your assumption is that these companies are robbing the government? Huh? First, it's their money to begin with. Second, a government that is running a three trillion dollar deficit (that's 3,000,000,000,000)is the real thief.

Rem said...

A young friend of mine has suggested that Americans will get no real reform until Congress enacts laws for publicly funded elections.

I agree. However, where do we start. The Douche-Bag Obama has shown himself to be rather conservative, so it won't come out of the white house. Pelosi is entrenched in the system, so I don't see her doing this.

Third Party? A secular party? Perhaps The American Secular Party, ASP?

Anonymous said...

Perhaps we need a list of corporations that skip paying taxes; then we could boycott. DO NOT FEED THE BEAST!