I read an article in Businessweek* the other day and learned more in detail about how U.S. corporations are avoiding federal taxes by a process called “inversion” – essentially having a post office box in a low-tax foreign nation as their “legal address” which subsequently means they needn’t pay taxes until they bring the funds back into the U.S.
According to Americans for Tax Fairness, an estimated $90 billion a year in federal taxes are being avoided due to this manipulation. They further estimate that U.S. corporations are presently holding $2.1 trillion in untaxed profits offshore.
This deferral process can be delayed indefinitely as long as the earned profits remain offshore. Architects of the tax evasion scheme have called it “Flip Flop,” the “Panama Scoot” and other nicknames taking pride in the work they have done in both designing the scheme and defending it against IRS challenges over the past thirty years.
This year, according to Businessweek, “inversions have received more attention than ever, as well-known companies such as Burger King and Pfizer announced plans to change their addresses (Pfizer didn’t follow through).” According to Americans for Tax Fairness, “Burger King’s planned ‘inversion’ will allow the company and its leading shareholders to avoid an estimated $400 million to $1.2 billion in U.S. taxes between 2015 and 2018.”
If this practice is to be made illegal it must be done by Congress. In July, President Obama called the practice ‘an unpatriotic tax loophole’ and urged Congress to put a stop to it.” Businessweek quotes the President: “’My attitude is, I don’t care if it’s legal,’ he said earlier in 2014, ‘it’s wrong.’”
As far back as the 1980s, shortly after the first inversion deal was tested, a congressional committee called the scheme a “mockery” of the tax code. Despite this, corporate lawyers have succeeded in defending this practice year after year against the IRS lawsuits, resulting in more regulations, more laws and more complexity, “each permutation more complicated than the last,” according to Businessweek.
So Congress, can’t you go against all the lobbyists to whom you feel beholding and act in the best interest of your country, and close the loopholes that keep these trillions of unpaid tax dollars offshore? Any good citizen of this country pays their share of taxes to support all the services from which they benefit. This needs to include corporations, who are much bigger lobbyists than any individuals.
Shareholders in these corporations must approve these tax dodges. So, shareholders, if you own stock in a company that is planning one of these inversions consider disapproving it as a good deed of a responsible citizen.
Taxpayers, you are the ones being negatively impacted by this huge loss of tax revenue. Can’t you demand that your Congressmen and Congresswomen take a stand against this unfair evasion of taxes – this wrongful dodge of responsible corporate citizenry? Corporations have lobbied their way into having plenty of advantages already, including “personhood.” Let us require them to pay their share at least in this regard and deliver significant revenue to the federal coffers as well as returning a much needed multi-trillion dollar infusion of capital into our domestic economy.
*Bloomberg Businessweek, December 22-28, 2014, p. 50-53
Oughtn't you publish this in a more public forum, where those whom you address directly - Congress and Taxpayers - might actually read your comments to them? An open letter to a newspaper or news site would make more sense, otherwise it smacks of narcissistic self-congratulatory rhetoric.
Posted by: aknative | January 18, 2015 at 10:49 AM
Dear aknative,
Over the years I have sent many bits to mainstream news outlets and never had anything published. So I remain focused on providing info to the choir that they may not have.
Posted by: John Renesch | January 22, 2015 at 10:05 AM