60 Minutes fail on corporate tax avoiders

Posted by AzBlueMeanie:

Even as a kid I loved 60 Minutes. In its early days it was "ambush" investigative journalism. Every week there was some crooked evil bastard who would answer his door only to be confronted by Mike Wallace – "Mike Wallace, 60 Minutes, can we talk to you?" The look of fear and dread on the face of the crooked evil bastard getting caught on tape by Mike Wallace was the best entertainment.

But over the past decade or so as new correspondents have been added and 60 Minutes has become more staid – and stale – it has lost its edginess. Case in point, Leslie Stahl's report last night on A look at the world's new corporate tax havens. It was if the Chicoms Chamber of Commerce handed her the talking points and said "here, read this."

Here's the talking points that Leslie Stahl did not get any opposing opinion to rebut. She couldn't find an economist  (Paul Krugman) or a tax expert (David Cay Johnston) to ask about the chamber's talking points? A look at the world's new corporate tax havens:

[Over $60 billion] in tax money not coming in to the IRS from American corporations. One major way they avoid paying the tax man is by parking their profits overseas. They'll tell you they're forced to do that because the corporate 35 percent tax rate is high in relation to other countries, and indeed it seems the tax code actually encourages companies to move their businesses out of the country.

* * *

"We are dealing with a tax system that is a dinosaur," Cisco CEO John Chambers told Stahl. 

One CEO who would talk to us was Chambers. Cisco is the giant high tech company headquartered in San Jose, Calif. He says our tax rate is insane. It's forcing companies into these maneuvers, especially when many other industrialized countries including Canada are busy lowering their tax rates in order to lure our companies and our jobs away. 

"Every other government in the world has realized that the U.S. has it wrong. They're saying, 'I'm going to have lower taxes, period.' That's what you see all across Western Europe, that's what you see in Asia in the developed countries," Chambers said.

* * *

"Well, if you have a 35 percent rate in the United States and, for example, a 12.5 percent rate in Ireland, there's a incentive to move your factory to Ireland," [Economist Martin Sullivan] explained. 

"Six hundred American companies are in Ireland and they employ 100,000 people," Stahl pointed out. "Those are jobs that aren't here. And they moved to Ireland because of taxes." 

"The U.S. Treasury in effect is subsidizing investment in Ireland," Sullivan said. 

"Why isn't everybody in Ireland if it's that great?" Stahl asked [with a big smile].

* * *

If they bring the money home, it's taxed the full 35 percent. If they leave it overseas, the IRS can't touch it. In other words, the tax law all but forces companies to keep their money out of the country, indefinitely. 

"We leave the money over there. I create jobs overseas; I acquire companies overseas; I build plants overseas; and I badly want to bring that money back," John Chambers told Stahl.

* * *

The total amount of money U.S. companies have trapped overseas is $1.2 trillion. Chambers is advocating for a one-time tax break to allow them to bring that money home at a rate of, say five percent. That would, he says, stimulate the economy and create jobs.

* * *

"My answer's very simple: every other developed country in the world has already done this. I'm not asking to give me a favor, or a hand out," Chambers replied. 

"You know what: it sounds like it," Stahl remarked. 

Chambers replied, "All we're asking is: Give us a level playing field. Get us close."

Let's take that last statement, "give us a level playing field." International corporations prey on weak governments that they can use their financial leverage to "negotiate" a low tax rate on the promise of bringing economic development and jobs to that country. (Sometimes they do, sometimes they don't.) Then the company turns to other countries in which it operates, e.g., the U.S., and says "give us what we want or we are taking our corporate operations and jobs elsewhere." Where I come from that is called extortion, not a "level playing field." This race to the bottom played out over time could eventually result in a corporate tax rate approaching zero.

It never occurred to Leslie Stahl to examine just who are corporations, and who will actually benefit. Fortunately, Dave Johnson at Campaign for America's Future knows to ask the right questions. Today's Plutocracy Post: GE Doesn't Pay Taxes — Taxpayers Pay GE | OurFuture.org:

The use of the general term "corporations" to describe the beneficiaries of these policies is really a smokescreen that masks the fact that really a very few people are benefiting. Yesterday's post, Lobbyists Admit Corporate Tax "Holiday" Didn't Work, But Demand It Again, pointed out that it is a very few actual people that we are really talking about here,

Corporate wealth is really just personal wealth, held at arms length from the person to mask what is going on. The wealthiest 1% own 50.9% of all stocks, bonds, and mutual fund assets. The wealthiest 10 percent own more than 90 percent. The bulk of us own less than 1 percent. When you hear about "corporate" holdings, think about this chart from the Working Group on Extreme Inequality:

These benefits accrue to the wealthy few at the expense of the rest of us. What many people don't understand is that it is also at the expense of other companies. Our infrastructure and public structures – roads, education, courts, customers – are the soil in which good companies can grow. When tax dodgers are able to avoid contributing to our communities and country, the overall environment for the rest of our businesses deteriorates and our worldwide competitiveness declines.

What prompted the ire of Dave Johnson? This report in the New York Times last week, G.E.’s Strategies Let It Avoid Taxes Altogether:

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

So not only did GE, the highly-profitable recipient of federal contracts and bailout money, not pay taxes, we paid them $3.2 billion!

Sen. Bernie Sanders of Vermont has compiled a "top ten" list of corporate tax avoiders. Bernie Sanders on The Ten Worst Corporate Tax Avoiders: It's Time for Them to Pay up and Share the Sacrifice:

Sanders compiled a list of some of some of the 10 worst corporate income tax avoiders:

1)      Exxon Mobil made $19 billion in profits in 2009.  Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.

2)      Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.

3)      Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.

4)      Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.

5)      Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.

6)      Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.

7)      Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.

8)      Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.

9)      ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.

10)    Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.

You will note that many of these corporate tax avoiders are also the recipient of federal TARP bailout  money and special low interest fund rates from the Federal Reserve Board. These corporations are abusing the American taxpayer.

As Dave Johnson noted, "In 1983 NY hotel-chain-owning billionaire Leona Helmsley said, 'We don't pay taxes. Only the little people pay taxes…'" Leona Helmsley eventually went to jail for tax evasion. Today, not one of the banksters of Wall Street has been prosecuted or gone to jail. Therein lies the problem.