Tuesday, May 12, 2009
"For years, we've talked about shutting down overseas tax havens that let companies set up operations to avoid paying taxes in America. That's what our budget will finally do...we're closing one of our largest tax loopholes that lets subsidiaries of some of our biggest companies tell the IRS that they're paying taxes abroad; tell foreign governments that they're paying taxes elsewhere; and avoid paying taxes anywhere."
- President Barack Obama -
I stand solidly behind the President in his effort to close these shamefully ridiculous tax loopholes huge corporations have been expoliting unethically for many years. I wrote about U.S. corporations setting up phony tax havens offshore in my March 27, 2009 blog titled "WANTED FOR TREASON: I.S. CORPORATIONS." At the time, I had no idea of the extent of this problem. Thanks to a very illuminating Rachel Maddow Show segment on MSNBC last week, I now know, and I am outraged now even more than before.
A total of 18,857 phony companies supposedly reside in that 5 story building pictured above. It is called "Ugland House" and it, as well as those 18,857 phony companies, all share its same address on S. Church St., George Town, Cayman Islands. Of the 18,857 phony companies with supposed mailing adresses and company headquarters based right there, half had billing addresses right here in the U.S.A., according to a 2008 Government Accounting Office (GAO) study! In 2007, 83 of the top 100 U.S. companies used offshore tax havens, including an astounding 25% of our government's largest contractors! The names of corporations using these handy tax dodges reads like a Who's Who of American business: Coca Cola, Intel, General Electric, Tyco, Seagate, Bank of America, Morgan Stanley, Citigroup, and many, many others. The last three I listed here by name even received government bailouts totaling BILLIONS as part of the controversial TARP program. So much for corporate morality and patriotic loyalty. Kids, if you want to be rich when you grow up, don't bother robbing banks. Just set up a corporation with phony offshore subsidiaries, and then never pay your taxes. To hell with your country.
Here's how the little scam works: American corporations, headquartered and realistically based here, file the name of a dummy shell company subsidiary with the Security and Exchange Commission, giving its address as being Ugland House in the Caymans, or elsewhere outside the country. They take tax deductions for phony overseas expenses and then don't report any of the overseas income. Citigroup listed an astonishing 427 foreign subsidiaries , including 91 in small Luxembourg, 90 in the Cayman Islands, and even 12 in the tiny Channel Islands! Bank of America showed 115 foreign subsidiaries in the Caymans, Bermuda, the Bahamas, Luxembourg, and even on the miniscule rock of Gibraltar! And good ol' Morgan Stanley listed 273 foreign subsidiaries supposedly operating in the Caymans, the Marshall Islands, and even the Island of Jersey. The list goes on and on and on, and has increased steadily since 2004.
This shows how immoral, wholly self-serving, greedy, and obsessed with profit our corporations and business community have become. Our corporate tax rate stands at 35% today, much, much lower than it was 60 years ago. Huge corporations have successfully shifted the burden of tax paying away from themselves onto wage earners, mainly in the middle and working classes. Yet American corporations still scream for tax relief and resort to phony scams to avoid paying taxes like I outline here today. Though most middle income Americans are taxed at an effective rate of 25% and actually pay right around that amount, by using dummy foreign subsidiaries, huge corporations can effecrtively pay only 3%, 1%, or even ZERO income tax on real earnings totaling BILLIONS. This wouldn't even be so bad except for the fact that many of these corporations have exported good paying American jobs overseas to cheap foreign labor markets while freezing or lowering American wage and benefit scales on the jobs still performed here. When placed in the context of ever-rising food, fuel, and pharmaceutical costs as well as skyrocketing corporate board member pay and benefit paxkages, this greedy corporate behavior is inexcusable and indefensible. Everyone is belt-tightening and suffering, especially those on fixed incomes, except the piggish, cheating corporations and their insulated and heartless executives. They, too, MUST pay their fair share and tighten THEIR belts too! ESPECIALLY, since we the taxpayers who actually PAY taxes, recently bailed out a number of these freeloading corporations who DON'T pay taxes, or who pay very, very little!
Naturally, conservative Republican crybabies like Grover Norquist, the Club for (Corporate) Growth, and Senator Mitch McConnell are all screaming foul at Obama's loophole-closing effort. McConnell even had the unmitigated gall to suggest that the President's action amounted to some kind of unfair tax increase on business. That, of course, was a typically distorted statement coming from a lamebrain conservative who obviously places the wants of big business far above the needs of ordinary citizens. For this action is not at all a tax increase, but rather a way of enforcing the existing tax laws. The anti-tax crowd also claim that the move will cripple business and curb economic growth. That, too, is an absolute lie and rubbish. In their zeal to stop Obama, they don't even bother to consider that a good chunk of the revenue which the government will now recover will go directly into a Research and Development Tax Credit for business to develop new products, services, and industries here within our borders.
I wish Obama and congressional Democrats would put some real teeth into enforcing the closure of these phony tax havens and prosecute those who have defrauded the government by using them. For the greedy and traitorous act of deliberate and fraudulent tax evasion, in a time of war for the country, when nearly 1 in 7 of us cannot afford health insurance and have none, when the middle class and poor are facing unparalleled modern economic hardship, when elderly and poor on fixed incomes sometimes have to choose between food or medication, here are filthy rich CEOs, CFOs, and huge corporations cheating on taxes and pocketing the cash. Were it up to me, I would like to see long jail terms at hard labor coupled with heavy fines for these offenders. Unfortunately, I will probably have to settle for a mere closing of their disgusting loopholes instead. Either way, you corporate executives had better start toeing the line, because the overwhelming majority of this country is fed up with your immoral and unethical business practices coming at our expense. We're tired of you using our taxpayer-funded roads to transport your imported goods for sale to us but not paying for it. We're tired of you using our taxpayer-funded police and fire departments to protect your property but not paying for it. We're tired of your using our taxpayer-funded schools to educate children but not paying for it. If you don't want to follow Sheriff Obama's rules, I'm sure a number of us average folk would be more than happy to form economic posses to run you down and string you up. The days of your unchallenged arrogance and shenanigans are over, boys. This is NOT an economic wild, wild west where you can do whatever, whenever, and however you damn well please and to hell with the rest of us! You had better adopt a new, permanent mindset---NOW!
Oh, by the way, the REAL occupant of Ugland House, ALL of it, is the dubious law firm of Maples and Calder, whose specialty is apparently setting up American corporations with phony shell companies using their Ugland House address for tax evasion purposes.
NEXT UP: "Time for REAL Representation! (Part IV)"