By Jon Mattes
March 26, 2011 (San Diego)--Did you miss the proposed trillion dollar government giveaway last week to big corporations? No, that is not a typo, a trillion not a billion, and yes, a Congressman proposed just that.
Representative Brian Bilbray of San Diego, a former lobbyist, proposed a bill that would allow US corporations to dodge taxes on a trillion dollars in profits. Forget the debate over the estate tax or a tax break for the super rich; this proposed giveaway has them all beat, hands down!
Here is the back story. Over the years, big corporations have found ways to cook their books by shifting profits overseas, thus reducing their taxes here in the U.S. For instance, Exxon Mobil paid no U.S. income tax in 2009 due to creative accounting.
Companies that are big enough can shift profits to countries such as Bermuda. Google cut its taxes by over $3 billion by moving most of its overseas income to Bermuda. Ask yourself how much business Google does in Bermuda? Seagate, the largest maker of hard disc drives, has its corporate headquarters in Grand Cayman. Grand Cayman has a zero corporate tax rate versus the U.S. corporate tax rate of 35%. So do you think Seagate is there for the sun or the tax rate?
In the old days, such schemes were favored by drug lords and were called money laundering.
Now back to Rep. Brian Bilbray. On March 11, Bilbray introduced a bill that would allow companies that have hidden their profits in offshore tax havens to repatriate ALL their profits back into the U.S. at a 0% tax rate. According to sources, the amount hidden offshore is estimated to be $1 trillion.
Bilbray wants to reward corporate money laundering. Most galling is that the bill is called the “Job Creation and Innovation Investment Act of 2011.” Who is he kidding? The only jobs created will be for the lawyers and accountants who specialize in tax havens. The only innovation is the creativity and cynicism of the bill. How sad.
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Perhaps taxes should have been paid on these earnings before they left the country. That would be a valid argument. However, a giveaway? First, it sounds like he is offering a moratorium to companies to stop this behavior and bring this large sum back into the US and put it to work here. Second, offering not to tax a trillion dollars (if that is what it is) is far from giving a trillion dollars away. Perhaps a refresher in accounting is in order.
In any regard the other option is to do nothing and let these tax havens enjoy using our billions of dollars.
The IRS often grants deals to entice offenders to correct their indiscretions.