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GAO Reports Bailout and Tech Firms Love Tax Havens

kdawson posted more than 5 years ago | from the how-to-spell-profit dept.

The Almighty Buck 347

theodp writes "Most of America's largest publicly traded corporations and Federal contractors — including those receiving billions of dollars from US taxpayers to finance their recovery — have set up offshore operations that could help them avoid paying US taxes, according to a GAO study released yesterday. Of the 100 largest public companies, 83 do business in tax-haven hot-spots like the Cayman Islands, Bermuda, and the British Virgin Islands. The report found that Citigroup, a recipient of $45B in bailout funds so far, has set up 427 subsidiaries in tax-haven countries, including 91 in Luxembourg, 90 in the Cayman Islands, and 35 in the British Virgin Islands. Household names on the lists from the tech sector include Apple (1 tax haven subsidiary), Cisco (38), Dell (29), HP (14), Intel (6), IBM (10), Microsoft (8), Motorola (4), and Oracle (77)."

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fp (-1, Offtopic)

Anonymous Coward | more than 5 years ago | (#26499695)

I didnt even read the summary!

Re:fp (0, Funny)

Anonymous Coward | more than 5 years ago | (#26499777)

I didn't even read your comment!

Re:fp (4, Funny)

Lord Bitman (95493) | more than 5 years ago | (#26500189)

dude, when you do... the coincidence is gonna blow your mind!

Re:fp (4, Funny)

rtfa-troll (1340807) | more than 5 years ago | (#26500221)

Well if you had both read the fine article before it was overloaded and had to be changed, you would have find that it had a perfect system for getting rich whilst meeting beautiful girls (or boys or non-determined goth types, depending on your taste) which unfortunately I can follow but can't explain. So don't make this mistake next time.

Off with her head! (3, Insightful)

Ostracus (1354233) | more than 5 years ago | (#26499703)

Isn't the way this worded presuming guilt before innocence? Is doing business in a tax-haven country an automatic fail?

What's more... (0)

Anonymous Coward | more than 5 years ago | (#26499755)

What's more, even if they were guilty, who cares? I mean, if they need a bailout, obviously they can't afford something so proletarian as taxes...

Yes. (5, Insightful)

copponex (13876) | more than 5 years ago | (#26499827)

I really get frustrated when doublespeak is acceptable. It's like the question, "Are prisoners in Guantanamo being tortured?" If they weren't being tortured, they would be in New York state, sitting in the same jail cells we use for other suspected murderers. The fact that anyone is asking the question is mind-boggling.

Similarly, any company that sets up in a small country that they do no business in is obviously up to something. Otherwise they wouldn't be there.

American business is a game, where the winners are those who best exploit their workers, the tax code, government contracts, and the environment. The most important bit is not getting caught, and having a lot of lawyers if you do.

(I'd like to defuse any rebuttal by saying "Wal-Mart.")

Re:Yes. (3, Insightful)

digitalunity (19107) | more than 5 years ago | (#26499877)

Wal-mart is a funny example. They do a lot of things right(warehousing, distribution, workers safety) but they also screw their employees badly and are destructive to small town economies.

As for these companies that just got big bailouts, well, I really wish the feds would just take all the money back and we can all roll on the floor laughing at them for it.

Re:Yes. (0)

Anonymous Coward | more than 5 years ago | (#26500421)

That's not insightful, its naive. Sure, take the money back, but don't come complaining when you lose your job because your employer can't get credit to cover payroll.

Re:Yes. (4, Insightful)

russotto (537200) | more than 5 years ago | (#26499973)

It's like the question, "Are prisoners in Guantanamo being tortured?" If they weren't being tortured, they would be in New York state, sitting in the same jail cells we use for other suspected murderers.

Err, no. The main reason they are held in Guantanemo was for a jurisdictional dodge about holding them at all. One that didn't work out, as it turns out; the courts didn't buy the idea that they were beyond the reach of US courts just because they weren't within the boundaries of the United States.

Similarly, any company that sets up in a small country that they do no business in is obviously up to something. Otherwise they wouldn't be there.

Nothing in this report says the companies do no business in the "tax haven" countries. Apple originally set up in Ireland to make Powerbooks, as I recall. They don't do manufacturing there any more but it's still their European headquarters. Coke and Pepsi almost certainly sell sugar water in all those tax haven jurisdictions. Intel does manufacturing in Costa Rica.

Multinationals are, well, multinational. It's hardly a surprise when they do business in companies the IRS or GAO isn't fond of, whether that's why they do it (which it probably is, in many cases) or not.

Anyway, one of the definitions for the countries on this list was "...jurisdictions that have a high level of nonresident financial activity, and may have characteristics including low or no taxes, light and flexible regulation, and a high level of client confidentiality. " Horrors. Why would a country ever want to do that?

Re:Yes. (4, Interesting)

truthsearch (249536) | more than 5 years ago | (#26500069)

I guess you haven't heard of many of the "offices" in the Cayman Islands consisting of one room, one phone, and one employee (never at his desk). Many exist purely to claim business in the country and filter money for tax purposes. They do no business there at all but save taxes.

Of course, this isn't every office or company. But many.

Re:no business there at all but save taxes. (1)

Lord Bitman (95493) | more than 5 years ago | (#26500215)

Just like those accountants.. never doing any real work, just saving money!

Re:Yes. (1)

megaditto (982598) | more than 5 years ago | (#26500269)

I am just curious, what is it you think they do with their tax-free money?

Re:Yes. (1)

Anpheus (908711) | more than 5 years ago | (#26500605)

Make more money, duh. Why are you even bothering to ask that question?

What would you do if I told you I could halve your income tax? Exactly what you were doing before, except you'd have -more money-. It's a lot easier to set up a bunch of legal entities to do this than to actually move you physically to Luxembourg though.

Re:Yes. (5, Informative)

Achromatic1978 (916097) | more than 5 years ago | (#26500117)

Nothing in this report says the companies do no business in the "tax haven" countries.

So, in other words, you didn't actually read the report. Just skimmed through, and then immediately jumped on Slashdot to slap someone down. From said report:

The GAO found 17 companies with no business in tax-haven locales, including Fannie Mae, Freddie Mac, United Parcel Service, Verizon, Lockheed Martin and Northrup Grumman.

Re:Yes. (5, Informative)

TubeSteak (669689) | more than 5 years ago | (#26500211)

Nothing in this report says the companies do no business in the "tax haven" countries. Apple originally set up in Ireland to make Powerbooks, as I recall. They don't do manufacturing there any more but it's still their European headquarters.

LoL

Ireland has veeeeery friendly tax laws and is a prime example of a Country where individuals and corporations send money to dodge US taxes. Part of the reason so many individuals and businesses setup their tax shelters in Ireland is specifically because Ireland does not have the public perception of being a tax haven.

The only reason Ireland (as a member of the EU) can do this is because EU law only prevents countries that meet the 'EU economic norm' from playing such games with tax law. Once Ireland develops, those convenient tax laws will have to be changed.

Re:Yes. (4, Interesting)

postbigbang (761081) | more than 5 years ago | (#26500343)

Apple setup in Ireland to appease an EU mandate regarding labor content in their products. This sort of thing was also done by the US to Japanese TV manufacturers. It's a time-honored way to get manufacturers to spend a little money in the country they're selling into-- to avoid getting hit with taxes and duties.

However, very little manufacturing goes on in the Caymans, the BWI, and Luxembourg. They're tax havens, just like Cheney's Halliburton likes to use. Getting back that revenue would mean the end of corporate welfare, and that's unlikely to happen soon.

So call a shovel a spade and don't weasel word about the implications.

Oh please, torture? (0, Troll)

unassimilatible (225662) | more than 5 years ago | (#26499975)

I really get frustrated when doublespeak is acceptable. It's like the question, "Are prisoners in Guantanamo being tortured?" If they weren't being tortured, they would be in New York state, sitting in the same jail cells we use for other suspected murderers. The fact that anyone is asking the question is mind-boggling.

In addition to being a totally off-topic thread hijack, tell me when, in the history of warfare, have POW's/detainees ever gotten civil jails and courts? I thought in war, enemies went to POW camps until the war is over, like the US did with the Nazi's, the Japanese, the North Koreans, the North Vietnamese, the Confederate soldiers, the British, etc. The point being, we don't want the enemy coming back and shooting us again, as 61 released prisoners have done to date [reuters.com] .

But now, because terrists flout all rules of war and Geneva, they should be treated better than POWs? I thought the point of Geneva was that you had to earn its protections by complying with its rules, carrot and stick. Think of the moral hazard. Now countries will actually be encouraged to foment terror, as terrorists will be treated better than POWs. And they can clog up our criminal courts with 100's even 1000's of them! Fun fun fun for Iran.

And now we have dropped the "torture" bar even lower. First it was waterboarding 4 people. But now torture is not getting the right jail? Have you ever seen a city or county jail? I assure you, Camp Delta is the nicest jail in the world. I saw a special on GB and I got hungry after I saw what they feed the detainees. So now torture isn't getting the right jail cell? And anyone who disagrees with that entirely new definition of torture is doublespeaking? Wow, just wow.

Re:Oh please, torture? (0, Troll)

Anonymous Coward | more than 5 years ago | (#26500083)

I hope you get to try some waterboarding. Later, you can tell us what you confessed to.

Just ask US Naval Pilots & Special Forces (0)

Anonymous Coward | more than 5 years ago | (#26500401)

They all go through it. But apparently it's too mean to use on the planner of 9/11.

Sorry, can't post using my ID, what with the rampant moderation abuse.

Re:Yes. (0)

Anonymous Coward | more than 5 years ago | (#26500077)

I really get frustrated when doublespeak is acceptable. It's like the question, "Are prisoners in Guantanamo being tortured?" If they weren't being tortured, they would be in New York state, sitting in the same jail cells we use for other suspected murderers. The fact that anyone is asking the question is mind-boggling.

It is perfectly normal in a time of war to hold prisoners (or "unlawful combatants") outside of the regular prison system. Torture is a completely separate issue.

Similarly, any company that sets up in a small country that they do no business in is obviously up to something. Otherwise they wouldn't be there.

Up to something? "Something" is not necessarily illegal. There are many perfectly legal reasons to do business in foreign countries, such as a better tax & legal climate.

Why are so many companies incorporated in Delaware? A favorable legal climate in the Chancery courts.

The Netherlands charges low tax on royalties (like music). Setting up a Dutch subsidiary is perfectly legal and above-board. U2, the Rolling Stones, and many others do business there: http://www.finfacts.com/irelandbusinessnews/publish/article_10008939.shtml [finfacts.com]

However, when Bono starts lecturing governments to do more, it's a bit hypocritical when he is (legally) hiding his assets from those same governments.

Re:Off with her head! (1)

rastilin (752802) | more than 5 years ago | (#26500027)

If the government has the kindness to give you 45 BILLION dollars to bail your dumbass self out of the excrement filled pit you have dug. One would imagine that you would then at least have the decency to pay the taxes you owe.

Not these people. THAT, is why this whole tax-haven business is so offensive to normal citizens.

Re:Off with her head! (1)

davester666 (731373) | more than 5 years ago | (#26500325)

Well, if they knew they had to pay taxes on the 45 billion, they would have asked for 80 or 90 billion, so they could cover the tax bill as well...

Re:Off with her head! (1)

metamatic (202216) | more than 5 years ago | (#26500309)

There's nothing illegal about doing business overseas, so long as you declare all of the income to the US IRS and pay US taxes on it. (You're allowed to deduct any overseas taxes you've already paid.)

However, I strongly suspect that if these companies were going to be declaring all the income to the US government, there wouldn't be any point in their having set up overseas shell companies.

It's kinda like seeing someone break into a house through a window. Sure, it could be his house, but if it was, wouldn't he have gone in through the door?

Re:Off with her head! (1)

bob5972 (693297) | more than 5 years ago | (#26500525)

Isn't the way this worded presuming guilt before innocence? Is doing business in a tax-haven country an automatic fail?

I'm pretty sure there's not a market for 91 subsidiary companies in Luxembourg...

Re:Off with her head! (1)

binpajama (1213342) | more than 5 years ago | (#26500533)

Very good point! I am sure the poor citizens of Cayman islands couldn't possibly do without a FIFTH of Citibank's subsidiaries world-wide.

You see, while American homo sapiens who need to watch TV to fill in their hours of leisure, the Cayman Islanders have evolved differently. They need bank transactions as a means of recreation. Without them, they feel unfulfilled and restive. There are Cayman islanders who spend up to eight hours a day making deposits and withdrawals in their checking accounts.

All Citibank does is to nobly provide them with their daily fix of ennui. We must be very careful before making presumptive remarks about the actions of those whose stated ambition is global prosperity. They know better than us what's good for the world.

Tax policy (4, Insightful)

XanC (644172) | more than 5 years ago | (#26499705)

Maybe if the US tax policy wasn't insanely out of line with the rest of the world, we wouldn't have this problem. Can you blame these companies for getting away?

Other countries charge income tax based on income earned in that country. The US charges income tax for income earned in any country. Where would you set up your company?

The FairTax [fairtax.org] would instantly make the US the world's tax haven.

Re:Tax policy (3, Interesting)

Carewolf (581105) | more than 5 years ago | (#26499779)

Don't kid yourself, large US based companies doesn't pay tax either. Tax heavens are just an easier way to avoid paying tax, it is saving the companies money on the payroll to accountants and number magicians, but no not on the tax bill. Only people and small companies pay tax.

Re:Tax policy (1, Insightful)

Anonymous Coward | more than 5 years ago | (#26500329)

It's apparent from your post that you're never even read a 10-K and know nothing about corporate taxes.

Here is Intel's:
http://investing.businessweek.com/research/stocks/financials/secfilings.asp?symbol=INTC.O

Note in 2007 they paid 2.2 billion income tax on 9.2 billion profit, with 80% of revenue coming from outside the US.

Hell yes I can blame them. (5, Insightful)

khasim (1285) | more than 5 years ago | (#26499847)

They are receiving US GOVERNMENT funds taken from US TAXPAYERS and they're stashing them in foreign tax havens.

This is solely for the benefit of their executives. It will not help rebuild the US economy.

There needs to be a new law passed TODAY (drag Congress back in) that makes that practice illegal.

If you want "bailout" funds, you cannot use a foreign tax haven.

If you use a foreign tax haven, you cannot receive "bailout" funds.

Why should the US taxpayers finance some CEO's retirement villa in Monte Carlo while the economy drags?

Re:Hell yes I can blame them. (1, Insightful)

Anonymous Coward | more than 5 years ago | (#26500009)

This is the way for skating out of SOX responsibilities much in the same manner going to China, Mexico, India, etc. is in regards to skating out from EPA and OSHA responsibilities. U.S. government needs to re-evaluate how trade is done, tax it when it is costly to U.S. interests (no more free license to pollute or disregard worker rights by offshoring), and only allow free trade with markets that operate under equal or more stringent environmental, worker, and economic regulation.

Write your congressman about this and complain! The current implementation of U.S. trade agreements are broken.

Exactly! (0, Troll)

unassimilatible (225662) | more than 5 years ago | (#26500037)

Maybe if the US tax policy wasn't insanely out of line with the rest of the world, we wouldn't have this problem. Can you blame these companies for getting away?

Absolutely, and this ludicrous, greedy policy (and regulations like Sarbanes-Oxley) are really helping to kill the US economy. Now a majority of the top IPOs every year occur in other countries. It used to be like 23 of the top 25 IPOs would always be in the US. Last year, it was like 2 of 25.

Other countries charge income tax based on income earned in that country. The US charges income tax for income earned in any country. Where would you set up your company?

Absolutely. I have three friends who got MBAs in the past 5 years. All three have separately joined or founded corporations in Ireland. Born and bred US MBAs, taking their business elsewhere. This tax policy is killing the US. And the remedy the Democrats want? Better enforcement! Right out in the open (failing) US companies are showing Congress, "look, we can't make it here, so we move our operations elsewhere." And the answer is to continue this policy, rather than, "hey, maybe we have made America business-unfriendly, and we should make the US more competitive to do business." Nope, the answer is to tighten the noose. Unbelievable.

Same thing is happening in California. Millionaires and business are fleeing. And all the want to do in Sacramento is spend more and tax more. Prescription for disaster. Oh well, they'll just spend spend spend, then blame Ahnold.

Re:Exactly! (0)

Anonymous Coward | more than 5 years ago | (#26500419)

Worst Troll mod ever. People seem to not want to hear that the US is not very conductive to starting businesses anymore.

Re:Tax policy (5, Insightful)

quanticle (843097) | more than 5 years ago | (#26500065)

Taxes are the price we pay for civilization.

The reason places like Luxembourg, Cayman Islands, etc. can get away with charging low (or no) corporate tax is that those places are small and relatively lightly populated. Therefore, the government there doesn't have a whole lot of needs, and can get away with a light budget. The solution to this inequality, as others have suggested, is to close loopholes and make sure that corporations are paying their fair share of taxes, not to reduce the size of our government to that of Luxembourg.

Re:Tax policy (5, Funny)

Nimey (114278) | more than 5 years ago | (#26500279)

Wrong. The solution is mass genocide, so that the United States is just as sparsely populated as Luxembourg and our taxes go down to similar levels.

Vote Genocide in 2010!

Re:Tax policy (1)

molarmass192 (608071) | more than 5 years ago | (#26500523)

I smell free lifeclocks and carousel for all!!!

Re:Tax policy (4, Insightful)

Yokaze (70883) | more than 5 years ago | (#26500161)

> Maybe if the US tax policy wasn't insanely out of line with the rest of the world, we wouldn't have this problem.

Rest of the world? The economical rest of the world is having the same problem. It isn't like they said, Tax Havens like Canada, France, UK, Germany or Japan.

Simple tragedy of the commons. Tax havens are small nations, which profit over-proportionally from shift of profit to their nations. A lower tax in small nations results in an increase in tax-income due to accounting of companies in larger economic nations. Hardly a sustainable approach for larger economies.

> Can you blame these companies for getting away?

Well, those companies make profits in nations, which provide them infrastructure, educated people as working force and affluent people as customers. Then they transfer the profits to a different nation due to lower taxes, thereby reducing their contribution to the same society, which provided for their profits.
I'd say that is hardly laudable.

Re:Tax policy (1)

sjs132 (631745) | more than 5 years ago | (#26500241)

I agree, too bad I can't register myself in a tax haven country and get away with it... :(

Re:Tax policy (0)

Anonymous Coward | more than 5 years ago | (#26500529)

In other words, if you don't like the law, it's okay to break it.
 
I'm cool with that -- I operate the same way. Rip. Burn. Distribute.

Re:Tax policy (0, Troll)

Rinisari (521266) | more than 5 years ago | (#26500589)

Right on. A switch from income tax, including capital gains and inheritance taxes, to a sales tax is the only way to ensure that the government gets its taxes.

The fair tax reduces the points of failure. Each entity (person, company, etc.) who pays tax is a point of failure: if an entity neglects to pay taxes, the government loses money (of course, the government can choose to pursue that entity for tax evasion, but that requires that more money be spent on forcibly collecting taxes).

By removing individuals and families from tax responsibilities, there are few points of failure, i.e. only entities which sell something (goods, services, etc.) actually pay tax. Of course, the purchaser—the individuals and families, plus other businesses—pays for that sales tax directly, and is thus still a tax payer, so they can still use the excuse to their elected officials, "I'm a taxpayer, listen to me."

In this way, we also collect tax from illegal aliens, legal resident aliens, and foreign visitors, who don't pay any taxes except local and state sales taxes on the things they (don't) buy.

It's also a far better stimulus than any package Congress could ever pass. These stimulus packages might trickle down so we taxpayers see $300-$600 per person, tops $1500. Imagine not paying any federal income tax. For me, that's another $10,000 in my pocket per year. I could turn around and spend more money on actual goods and services, which would have tax on them, and the government would probably make $6,000 of that back in sales taxes.

Combine my savings with the additional sales tax gains from the aforementioned people, plus the high-class folks who spend more in a day than I make in a year, and everyone is paying their share according to what they buy!

People are given an incentive to save, to build up their nest egg so they can spend more down the line.

It's not a perfect system—I would like to see federal taxes abolished altogether and the federal government get its operating budget from the states (300 million points of failure to perhaps ~25 million points of failure, to 50 points of failure). However, it's certainly a start.

It's a TARP! (0)

ShakaUVM (157947) | more than 5 years ago | (#26499707)

So instead of giving out $300,000 per person to these corps that have already proven they don't know how to run a business (and now might be shuffling all the money offshore, THX BUSH!), couldn't we have just given $300,000 to each man, woman and child in America?

Re:It's a TARP! (0)

Anonymous Coward | more than 5 years ago | (#26499735)

Oh, you have many more politicians to be thanking than Bush. Sooooooo many more. Like all your democratic Congress. and the Obamarama (who received milllllllions of dollars from good ol' Fannie Mae). Plenty of blame to go around, too!

Re:It's a TARP! (0)

Anonymous Coward | more than 5 years ago | (#26499737)

You fail at math. That would be something like 90 trillion dollars or more than 10 times the GDP of the whole US.

Re:It's a TARP! (4, Informative)

Facetious (710885) | more than 5 years ago | (#26499747)

I saw the same email you did, and the originator wasn't very good at math. It is closer to $400 per American, not $300,000.

Re:It's a TARP! (0)

Anonymous Coward | more than 5 years ago | (#26499867)

The writing of that email was probably outsourced to the great tax haven British Virgin Islands or Ireland.

Re:It's a TARP! (-1)

Anonymous Coward | more than 5 years ago | (#26499893)

No, it's gotta be from India because it smells funny.

Thank you, I'll be here all week!

It would STILL be better. (5, Interesting)

khasim (1285) | more than 5 years ago | (#26499941)

To drive the economy, you want the people with the LEAST money to spend MORE money.

The VELOCITY of the money is what drives our tax system. The government gets more taxes if a dollar is used 100 times than if it is used 10 times.

Buying a pizza - taxed.
Pizza shop owner pays delivery guy - taxed.
Delivery guy goes to dinner with his girlfriend - taxed.
Restaurant owner pays cook - taxed.
Cook buys muffler for car - taxed. ... etc

Pump enough money into the lower economic rungs and more pizza delivery guys will have to be hired to meet the demand for more pizzas.

Give the money to some company that's going to stash it in an off-shore tax haven ... the US jobs stagnate.

Re:It would STILL be better. (1)

Facetious (710885) | more than 5 years ago | (#26500615)

Agreed. I was just pointing out that the figures needed some examination. As described below, the figure is probably closer to $3,000 per person, and maybe as high as $6,000 per taxpayer.

Re:$300,000 (1)

TaoPhoenix (980487) | more than 5 years ago | (#26500053)

His figure is suspiciously close to the amount of Monopoly money that $400 can by in copies of the game with your $400 of REAL money.

The Italians tried that hyperinflation thing once.

Re:It's a TARP! (1)

ShakaUVM (157947) | more than 5 years ago | (#26500059)

$900B / 300M = 3,000. For the one bailout. Yeah, I was off by two zeroes. But it's macro economics, so that's close enough.

Still a lot more than $400 pp though.

Re:It's a TARP! (1)

PIBM (588930) | more than 5 years ago | (#26500097)

It was only one zero of 400 though ;)

Re:It's a TARP! (1)

Facetious (710885) | more than 5 years ago | (#26500601)

Fair enough. By the time all this spending is done, it will be over that, I'm certain. I will even concede that the number of working Americans is a lot less than 300M, making the burden on taxpayers that much more.

How does this make sense? (2, Insightful)

feepness (543479) | more than 5 years ago | (#26499717)

I was against the bailout to begin with, but this is silly.

We give them money, then they are supposed to give it back?

Is this so Hank Paulson and some IRS agent can siphon some off to keep their jobs?

US Corp. Tax Load VS Other Countries is... (5, Insightful)

BoRegardless (721219) | more than 5 years ago | (#26499719)

2nd highest in the industrialized world behind only Japan, as I recall the most recent article.

California has the highest or 2nd highest corp. (and other) taxes and has a net outflow of population compared to inflow.

You don't think taxes has something to do with economic decisions?

Think again.

Re:US Corp. Tax Load VS Other Countries is... (2, Insightful)

stinerman (812158) | more than 5 years ago | (#26500001)

Our stated corporate tax rates are relatively high. However, we have so many loopholes, deductions, credits, etc. no one actually pays the rate listed in a table somewhere.

Real taxes paid by corporations is actually pretty low by world standards. No, you won't get a cite because I'm lazy.

That being said, business doesn't pay taxes. Taxes are just another cost passed along to the consumer.

Re:US Corp. Tax Load VS Other Countries is... (2, Interesting)

quanticle (843097) | more than 5 years ago | (#26500089)

If that's the case, then wouldn't we be better off by lowering the overall tax rate and closing loopholes so that more corporations pay the stated tax rate, rather than using loopholes to pay a rate below the stated rate?

Re:US Corp. Tax Load VS Other Countries is... (3, Interesting)

stinerman (812158) | more than 5 years ago | (#26500219)

Yes we would. However such a policy would make sense, which is why it would never be implemented.

Re:US Corp. Tax Load VS Other Countries is... (1)

moosesocks (264553) | more than 5 years ago | (#26500611)

Real taxes paid by corporations is actually pretty low by world standards. No, you won't get a cite because I'm lazy.

Anyone care to jump in with a citation? There are about a dozen +4/+5 posts on this topic that make that assertion without providing a shred of evidence.

For now, I'm not quite buying it....

Re:US Corp. Tax Load VS Other Countries is... (1, Informative)

Anonymous Coward | more than 5 years ago | (#26500079)

2nd highest in the industrialized world behind only Japan, as I recall the most recent article.

It's a commonly cited statistic, but it's very misleading. The US has high base tax rates but also has more generous deductions and credits than most places. The effective corporate tax rate (in the low 20% range) is about middle of the road among developed countries.

It also doesn't have anything to do with the issue of tax havens -- it's not that companies are actually moving their operations to the Cayman Islands (etc), its that they structure themselves in ways that let them legally pretend that's where their income happened. Unless you got rid of taxes entirely there would always be countries that allow themselves to be used in such a way. It makes more sense to craft regulations to prevent these sorts of bookkeeping games, especially among companies that are on the dole.

California has the highest or 2nd highest corp. (and other) taxes.

[citation need] Taxes here in CA are fairly high compared to the rest of the country, but our corporate taxes rank about 10th last I heard.

Re:US Corp. Tax Load VS Other Countries is... (1)

scamper_22 (1073470) | more than 5 years ago | (#26500179)

Put it this way,

If they didn't setup Tax Havens, they would probably have needed a bigger bail out.

In all seriousness, the corporate tax rate should be 0%. We would end this shell game immediately.

A corporation is not a person. No one cares how much money it makes. People only care when they get paid.
- shareholders get dividends and capitals gains... this is taxed
- employees get paid a salary... this is taxed as income
- CEOs get paid a salary and bonuses... this is taxes as income

So voila... eliminate the corporate tax and collect the money as it leaves the corporation. Imagine the savings. No more tax shelters. Corporations could save billions on accounting and tax lawyers. Imagine that, spending more money on R&D than on accountants and lawyers.

But it's all optics. I can't really see a politician explaining this logic. They would get slaughtered on TV for suggesting a 0% corporate tax rate.

Re:US Corp. Tax Load VS Other Countries is... (4, Insightful)

yachius (1348219) | more than 5 years ago | (#26500361)

The billions and billions of dollars that sit in corporate bank accounts shouldn't be taxed? CEOs will just start using expense accounts for everything instead of multi-million dollar salaries.

Re:US Corp. Tax Load VS Other Countries is... (1)

scamper_22 (1073470) | more than 5 years ago | (#26500465)

Billions in corporate accounts is a good thing. Do you notice how microsoft and cisco are able to weather economic downturns? It's called being a healthy company. Unlike government, corporations have to earn every dollar and have savings during downturns.

As to expense accounts, give me a break. They can do that now if they want. The IRS already monitors these and audits them.

If you really really really must prevent hoarding, you can have a simple flat tax on any money in the corporate bank over say 10X annual earnings. Theoretically, that gives the corporation a buffer of 10 years to weather recessions and what not.

Re:US Corp. Tax Load VS Other Countries is... (0)

Anonymous Coward | more than 5 years ago | (#26500357)

Nice point. It's also worth mentioning that Japan has been in a 13 year economic decline too.

This isn't surprising... (5, Insightful)

solder_fox (1453905) | more than 5 years ago | (#26499729)

Theoretically, their duty is to maximize return on investment for their stockholders, which means doing everything they can legally to minimize their tax liability. So if a tax shelter is legal, expect them to use it. (If it's not legal, expect them to try to pretend it's legal.)

Now, though, because in some cases their partial owner is the U.S. government, there is a conflict of interest between the interests of the government shareholder and the private shareholders.

Re:This isn't surprising... (3, Interesting)

larry bagina (561269) | more than 5 years ago | (#26499869)

Yes... with the government involvement, their directive is no longer "to make money" but "do what we tell you to do". For banks, that means everyone should be able to own a home, even if they can't afford it. For GM/Chrysler, that means building green/ethanol vehicles (even if nobody wants them anymore).

Re:This isn't surprising... (3, Insightful)

Achromatic1978 (916097) | more than 5 years ago | (#26500151)

For GM/Chrysler, that means building green/ethanol vehicles (even if nobody wants them anymore).

Which is, of course, why the waiting list for the Prius is currently at four months and growing, and yet there's no waiting list for a Chevy Silverado, etc?

Re:This isn't surprising... (1)

Waffle Iron (339739) | more than 5 years ago | (#26500275)

Yes... with the government involvement, their directive is no longer "to make money" but "do what we tell you to do".

Which is as it should be.

The old owners (shareholders) objective in running these companies was to make money. The new owner (the government) has different objectives.

Too bad. When you work at a company, you do what the boss wants.

Re:This isn't surprising... (3, Insightful)

HangingChad (677530) | more than 5 years ago | (#26500073)

Theoretically, their duty is to maximize return on investment for their stockholders, which means doing everything they can legally to minimize their tax liability.

I've heard that line ever since the Regan administration. It's a line corporate execs use to excuse excess and over-stepping. Fiduciary duty to investors does not require anyone to cheat the government and broader base of taxpayers by setting up operations in tax shelter countries and burying revenue to avoid paying US taxes.

It's time we crushed that truism and stop accepting it as some sort of financial gospel that will excuse corporate misbehavior. The "free market" we have in place now rewards a few people at the top and screws everyone else down the line. Time for accountability and responsibility to come back in style and that starts with the people at the top of the artificial person we call a corporation.

Re:This isn't surprising... (2, Interesting)

Anonymous Coward | more than 5 years ago | (#26500147)

"their duty is to maximize return on investment for their stockholders, which means doing everything they can legally to minimize their tax liability."

they also do everything they can to minimize everything else too. This is why i now refuse to work for any company which is publicly traded. These companies dont give a shit about anything but the shareholders, customers and employees dont matter in the least.

In fact, i may go further still & refuse to buy from publicly traded companies, but that will be a tough boycott to carry out.

Re:This isn't surprising... (1)

FlyingBishop (1293238) | more than 5 years ago | (#26500537)

Surprising? Of course not. The point is its wrong.

Respond Appropriately (2, Insightful)

shma (863063) | more than 5 years ago | (#26499753)

If the government is willing to give your tax dollars to companies that cheat the US, then the only appropriate response is to refuse to pay your taxes, and get as many people as possible to do the same.

Fleein' ain't cheatin' (0)

Anonymous Coward | more than 5 years ago | (#26500127)

The government has no inherent right to tax money. It is, in fact, impossible to cheat the government out of tax revenue, because taxes are not an actual debt that the government deserves to be paid for.

Taxes are a levy. They are a dictate that the government wants your money and plans to take it, regardless of any action by you. There is no "debt" you're paying. You're just getting robbed.

Re:Respond Appropriately (1)

cool_arrow (881921) | more than 5 years ago | (#26500165)

We can't even opt-out of having the govt. manage our own retirement funds (social security).

Re:Respond Appropriately (0)

Anonymous Coward | more than 5 years ago | (#26500167)

That has been tried. From rich people to poor people. They end up in jail or have to pay what they owe + interest + fines.

The law doesn't care about motives my friend.

Re:Respond Appropriately (0)

Anonymous Coward | more than 5 years ago | (#26500561)

I'm sure China would happily continue financing the US debt long enough for the world to witness the spectacle of American government dragging its citizens off to tax prison.

shut down the ones we own (1)

ralphdaugherty (225648) | more than 5 years ago | (#26499765)

      We know what to do with the ones we own now.

  rd

Surprised? (0)

Anonymous Coward | more than 5 years ago | (#26499769)

So this is a surprise that companies are dodging taxes?

Judge Learned Hand said it best (5, Insightful)

mr_death (106532) | more than 5 years ago | (#26499813)

"there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible".

People and companies respond to incentives -- it is really surprising that the bizarre tax structure in the US pushes companies to form subsidiaries? Apparently it is, to either clueless or grandstanding politicians.

Re:Judge Learned Hand said it best (1)

msuarezalvarez (667058) | more than 5 years ago | (#26500201)

So, setting up elaborate structures to avoid being convicted of, say, murder, is also acceptable in your eyes?

Re:Judge Learned Hand said it best (1)

TubeSteak (669689) | more than 5 years ago | (#26500305)

People and companies respond to incentives -- it is really surprising that the bizarre tax structure in the US pushes companies to form subsidiaries?

Step 1. Form a subsidiary in Ireland or some tropical island
Step 2. Give patents/copyrights/trademarks to the subsidiary
Step 3: Short Version: Profit!

Step 3. Long Version: License your former IP from the subsidiary so that you can write off the payments as a business expense, thus lowering your US tax burden AND book the payments as a profit through the subsidiary, in a country where tax on profits is minimal. And this is one of the simpler schemes.

You tell me if that sounds like a result of "the bizarre tax structure in the US" because I'm going to go ahead and assert that it is the result of companies and individuals seeking to dodge their domestic tax obligations.

Calling captain obvious: greed alert (1, Insightful)

Anonymous Coward | more than 5 years ago | (#26499923)

The reason we got here: greed. We did nothing to address the underlying reason for the economic crisis, so is it surprising that greed continues?

Switch to Land Value Taxation (1, Interesting)

Anonymous Coward | more than 5 years ago | (#26499931)

Tax the full rental value of bare land, and remove all taxes on labor and capital, excluding social security.

Not only would you provide a bigger economic stimulus than any of the current proposals -- one estimate puts it at a trillion dollars per year (see http://wealthandwant.com/docs/Tideman_Applications_LVT.html [wealthandwant.com] ) without deficit spending -- it's pretty difficult to stick an acre of Manhattan in a Swiss bank account.

Plus, capital likes to flow to where there are low taxes. The giant sucking sound would be headed back to the United States, for once.

Legal and understandable - (4, Insightful)

Anonymous Coward | more than 5 years ago | (#26499933)

Most of the major companies mentioned are not receiving any "rescue" from the government, and would not want or need any. Additionally, just because a business has set up a subsidiary in another country does not at all indicate that it is trying to avoid taxes. There are many reasons to set up subsidiaries, including requirements of the local governments. These are LEGAL subsidiaries, whether the purpose is for tax reasons or otherwise. The corporate tax rate is so high in the U.S. that some of these businesses (and others) feel compelled to take LEGAL action to lower their taxes to workable levels.

Re:Legal and understandable - (3, Informative)

Achromatic1978 (916097) | more than 5 years ago | (#26500193)

17 of the companies listed have offices in those countries despite doing no business there, so the "requirements of local government" go out the window.

For some of those other countries, the "local office" requirement was made at the behest of their banks, because they were scared that they'd lose the business of some of these companies when other countries introduced restrictions on the use of tax havens.

You'll notice that for many of these companies that supposedly do do business in those countries, the only address you'll find for them in the country will be, curiously enough, also the address for their lawyers in that country, or their accountants, and they'll only have one employee, who is actually "on part time secondment", curiously enough, from said lawyer or accountancy.

Corporations are wonderful (1)

similar_name (1164087) | more than 5 years ago | (#26499967)

I don't know why anyone complains about this. I mean it's not like corporations are anything but the great back bone of our country. Forget rights and freedoms, we all know it's the corporations who make this country great. It is why we give them all of the rights and privileges of human beings but none of the responsibility. For instance they own copyrights much longer than mortal humans. I mean look, we have one of the highest corporate tax burdens in the free world and one of the strongest economies on the planet. Don't you see how that tax burden is crippling us. Just imagine if our corporations paid less taxes like Europe. Just think lower taxes=better business right. Bermuda is the next economic powerhouse then, right. Right?

Re:Corporations are wonderful (1)

cyber-vandal (148830) | more than 5 years ago | (#26500099)

Don't be silly taxes and regulations are evil - that's why the countries with the least taxes and regulations have the richest citizens and the most profitable companies.

Scammers (0)

Anonymous Coward | more than 5 years ago | (#26500067)

The tax dodges these companies set up is to protect investors and shareholders, which the companies are required to do BY US FEDERAL LAW. It contradicts what is best for the US, and laws should prevent moving funds (maybe a limit of 2% of revenue per year). It will allow the creation of overseas companies, but won't allow tax evasion. There isn't any guilt here as no laws have been broken, but that doesn't make it right. As a taxpayer, I don't believe that these companies are properly rewarding countries buying their products. Taxpayers have to fund bailouts for these companies (as shown), and incentives are provided. If you are big enough to form an overseas company, you are big enough to pay tax.

This isn't new. (1, Troll)

owlnation (858981) | more than 5 years ago | (#26500071)

Sure corporations do this. And not just US ones. And not just corporations, many non-profit organizations also benefit from that status to maximize their revenue.

Greenpeace, Amnesty International, Mozilla Foundation, Wikipedia and many, more more are just flying non-profit "flags of convenience" to avoid paying taxes on their commercial operations arms.

The Tax system is deeply flawed, and since it benefits the rich, powerful, and those who aspire to be, it's not going to change any time before Hell freezes over.

This is the conservative nanny state at work. (1)

Lorien_the_first_one (1178397) | more than 5 years ago | (#26500149)

Go figure.

republicans tag (2, Informative)

rpillala (583965) | more than 5 years ago | (#26500213)

I see the "republicans" tag on this story and am having a hard time making the connection. If I remember right, a large number of republican members of congress didn't like the idea of the bailout and continue to speak against the release of the second half of the money. We need a tag called "bipartisans." I think part of Obama's appeal to monied interests is "All this partisan bickering is getting in the way of what we can really do for this country: get paid."

The Republicans cared so much (3, Insightful)

Beelzebud (1361137) | more than 5 years ago | (#26500307)

That they did nothing but deregulate for 10 years. The only reason some Republican politicians made political theater out of the bailout is because it was an easy way to appeal to pissed off citizens during an election year. Conservative economic policies have reigned supreme for a decade, and this mess is what we have to show for it. Don't feign surprise when blame is placed at the feet of the party that controlled the policies that lead to the mess.

Free Trade until you need a bail out. (1)

Beelzebud (1361137) | more than 5 years ago | (#26500257)

These "Free Trade" acolytes love the free market until it's their ass on the line, and then tax-funded government welfare is just fine. Then they have the nerve (as many are doing in this thread) to say that they should be able to legally dodge paying taxes because "it isn't fair". If these companies think paying taxes is so horrible, then they should reject tax funded bailouts and go bankrupt just like any citizen would have to if they got themselves in a bunch of trouble. You won't see that though, because it's easier to talk tough about welfare and taxes, while you gobble up those very same funds to clean your messes up.

News Flash (0)

Anonymous Coward | more than 5 years ago | (#26500367)

Pro wrestling is faked too.

Time to End White-Collar Theft (3, Insightful)

Phoenix666 (184391) | more than 5 years ago | (#26500375)

Corporations and the power-elite have ripped the US taxpayers off to the tune of trillions of dollars over the past eight years alone. They always have, of course, but it has grown so rampant and egregious that we must put a stop to it once and for all. That means cracking down on offshoring and outsourcing by companies that come to the US taxpayer begging for hand-outs. It means life-sentences or worse for the white-collar criminals like Bernie Madoff who are responsible. It means revocation of corporate charters for companies that do wrong, to curb the complicity of Boards of Directors and middle-management in white-collar crime; there must be more cases like Arthur Andersen being put out of business by the government.

And to those who contend that if we hold companies and white-collar criminals responsible for their actions that capital will simply flee the country, I ask, where are they gonna go? Where can they go that the long arm of the American people cannot reach? Mars? Because the US can make life on earth very uncomfortable for any place else that arouses its ire by sheltering them.

No wonder Americans think government doesn't work. (1)

toby (759) | more than 5 years ago | (#26500425)

n/t

Kill 'em all ... (0)

Anonymous Coward | more than 5 years ago | (#26500441)

and let the invisible hand sort them out.

Corp Tax take shrinking (1, Troll)

EEPROMS (889169) | more than 5 years ago | (#26500457)

I find it amusing that US politicians are always talking about decreasing personal income tax, at the same time the corporate tax take has gone from 34% (1968) to just 15% in 2008. So who is paying the missing 19% of the tax take pie you may ask ? At the end of the day you and "your children" are as the government prints money and borrows. This gives the wonderful double whammy of an inflated currency (true worth of the currency drops) and a massive debt to pay off (over $3000 per person needs to be spent just to pay the interest every year). So as your tax money is used to bail out companies who pay less than 2% tax on total income thanks to off shored holdings you have to wonder who is getting screwed during this recession.

Praxeology for Dummies (1)

MSTCrow5429 (642744) | more than 5 years ago | (#26500499)

People want to avoid being stolen from? Who would have thought? That some people are more than willing to steal from others, while hypocritically trying to avoid being stolen from themselves? One of the many unfortunate corruptions of civil society that the government brings.

They have a duty to the shareholders (4, Insightful)

Superpiduh (919563) | more than 5 years ago | (#26500515)

If these companies didn't minimize their corporate taxes through any (legal) means possible, then they are doing a disservice to their shareholders. I would argue that they are doing a criminal disservice by not minimizing their taxes - they are not maximimizing the return on investment to their shareholders. Assuming that the money saved in taxes doesn't end up all being spent on hookers and blow for the top executives of a company, minimizing taxes helps the business grow. If you think paying taxes is such a great idea, go ahead, volunteer some extra money to the tax department, or avoid taking any of your legal deductions.

Better Criteria (1)

IronClad (114176) | more than 5 years ago | (#26500549)

It seems the article and the report casts the net too wide.

Some mega-corps (like Coca-Cola and Cisco) actually do business everywhere, and even though they show considerable numbers of businesses in tax havens, those are a small fraction (10%) of the total number of countries in which they have offices. For companies like that, I'd be surprised to find a country where they are *not* operating.

Others, like Chevron and Goldman Sachs, show over half of their foreign operations in tax-haven locales. To me, that sounds very slimy.

Others are somewhere in between, probably representing a somewhat disproportionate presence in tax havens.

What else would you expect? Corporations do behave like psychopaths.

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