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Wednesday, June 2, 2010

Arianna Huffington poses a question about offshore tax havens

Why are they still allowed? They cost the Treasury over $100 billion a year, far more than enough to fund our education system that is currently being gutted by budget cuts across the country with an expected 300,000 teachers to be laid off this year alone. That does not bode well for the future of this country.
You want Exhibit A of two sets of rules? According to the White House, in 2004, the last year data on this was compiled, U.S. multinational corporations paid roughly $16 billion in taxes on $700 billion in foreign active earnings -- putting their tax rate at around 2.3 percent. Know many middle class Americans getting off that easy at tax time?

In December 2008, the Government Accounting Office reported that 83 of the 100 largest publicly-traded companies in the country -- including AT&T, Chevron, IBM, American Express, GE, Boeing, Dow, and AIG -- had subsidiaries in tax havens -- or, as the corporate class comically calls them, "financial privacy jurisdictions."
Almost all these companies receive large government contracts and additional tax breaks. One of the worst offenders is good old Halliburton, Dick Cheney's former company.
Perhaps no company exemplifies the corporate class/middle class double standard more than KBR/Halliburton. The company got billions from U.S. taxpayers, then turned around and used a Cayman Island tax dodge to pump up its bottom line. As the Boston Globe's Farah Stockman reported, KBR, until 2007 a unit of Halliburton, "has avoided paying hundreds of millions of dollars in federal Medicare and Social Security taxes by hiring workers through shell companies based in this tropical tax haven."

In 2008, the company listed 10,500 Americans as being officially employed by two companies that, as Stockman wrote, "exist in a computer file on the fourth floor of a building on a palm-studded boulevard here in the Caribbean." Aside from the tax advantages, Stockman points out another benefit of this dodge: Americans who officially work for a company whose headquarters is a computer file in the Caymans are not eligible for unemployment insurance or other benefits when they get laid off -- something many of them found out the hard way.
A watered down bill to address at least some of these iniquities barely passed in the house with all Republicans voting against it but it is expected to die in the Senate where enough Democratic corporate allies such as Chuck Schumer are expected to oppose even the few changes in the bill.

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