Donald Trump wants to cut what some call the “highest corporate tax rate in the world.” The tax cut will, according to Treasury Secretary Steve Mnuchin, “pay for itself with economic growth.”
Two delusions in one. The realities are far different for anyone who actually considers the facts. And some of the facts about 2016 tax avoidance are shocking and depressing. For example, two of the big banks (JP Morgan and Bank of America) together UNDERPAID THEIR TAXES BY MORE THAN TRUMP’S PROPOSED $10.6 BILLION EDUCATION CUTS, which would eliminate or reduce after-school programs, work-study programs, state grants, teacher training, arts programs, and physical education. The two banks combined to DEFER nearly $10 billion.
Companies that use U.S. resources but claim ALL their profits in other countries
Exxon has over half of its natural gas facilities, half of its developed acreage, the great majority of its productive and development wells, and half of its retail sites in the U.S. but declared $5.8 billion in U.S. losses along with $13.8 billion in foreign profits in 2016. The company CLAIMED A CREDIT on its U.S. income tax.
Pfizer had half of its sales in the U.S. in 2016, yet claimed an $8.5 billion LOSS IN THE U.S. along with nearly $17 billion in foreign profits. Despite paying an effective tax rate of just 4 percent on its total income in 2016, and despite being one of the nine pharmaceutical companies among the top 30 Fortune 500 firms in offshore tax hoarding, Pfizer CEO Ian Read complained that U.S. taxes had his company fighting “with one hand tied behind our back.”
Dow Chemical had 63 percent of its assets and 35 percent of its sales in the U.S. in 2016, but declared only 11% of its income in the United States. Caterpillar generates nearly half of its sales in the U.S., but claimed over $2 billion in U.S. losses and over $2 billion in foreign profits – and, of course, a credit on its U.S. tax bill.
Companies that defer their taxes, year after year after year…
In the spotlight here is lovable old Warren Buffett, whose company Berkshire Hathaway has used “hypothetical amounts” to ‘pay’ its taxes while actually deferring $77 billion in real taxes. The company would keep 20% of this – tax-free FOREVER – if Trump’s tax plan were to go through.
According to Barron’s “It seems that Buffett and his businesses are serial deprivers of tax revenue to the U.S. Treasury. Yet that does not deter him from loudly advocating higher income tax rates for others.” Buffett endears himself to average Americans by complaining that “My friends and I have been coddled long enough by a billionaire-friendly Congress.”
Another extreme deferrer is Apple, the leading offender among the Fortune 500 companies that are collectively holding over $2.1 trillion in accumulated profits offshore for tax purposes, with estimated taxes due of over $600 billion. CEO Tim Cook said, “We’re not a tax dodger. We pay our share and then some.”
Companies that have crippled a state’s K-12 and higher education systems
The mayor of Chicago and governor of Illinois are blaming each other for the Chicago Public School budget crisis, and Illinois colleges are in constant danger of being shut down. But Illinois lost over a billion dollars in 2016 tax revenue to ten of its largest companies, which according to their own records paid just 1.8% of their profits in state taxes, about a quarter of the required amount.
Yet it’s the children and the taxpayers who bear the burden of reform. Illinois has the highest educational revenue shortfall among the 50 states, and it cut higher education spending by over 50% from 2008 to 2016. Illinois has the 2nd-highest property taxes in the nation. The Institute on Taxation and Economic Policy named Illinois one of the ten “Most Regressive State Tax Systems,” with the third-highest “Taxes on the Poor.”
But no mention of the tax avoiders. Just 10 of them would have contributed an additional $1.1 billion to Illinois educational needs, if they had paid what they owe.
Companies that just don’t pay
Notorious non-payer General Electric stayed true to form in 2016, claiming a $2.6 billion credit even though it had over $2 billion in U.S. profits (and $9 billion in profits overall).
Then come the banks – Bank of America, JP Morgan, and Citigroup – which together made $53 billion in U.S. profits but paid 10% or less in taxes, with Bank of America ‘leading’ the way with a 2% tax payment on its $16 billion profit.
Ten companies mentioned in this report collectively withheld nearly $15 billion in tax money in 2016.
That’s as much as Trump’s proposed cut for Health and Human Services, which carries out essential research on cancer and deadly threats like the Ebola and Zika viruses.
Corporations make billions from U.S. research and education, but then they turn around and cheat us on taxes. And Republicans think corporations should get a tax break.
Stop tax breaks for the rich: Create a new tax system that doesn’t favor the wealthy
— source nationofchange.org by Paul Buchheit