America’s Biggest Corporations Aren’t Paying Their Taxes
America's corporate tax rate is 35 percent, yet somehow, 115 companies on the S&P500 pay less than 20 percent in taxes. This number does not even include 37 companies, such as Citigroup and AIG, that received more in tax credits than they paid.
Every year the government loses out on over $60 billion a year in money that doesn't come in from American corporations because of loopholes in the immensely complicated tax code or various tax havens.
Corporate Tax Havens Overseas
One major way that corporations avoid paying their taxes is by moving profits overseas. Corporations claim this action is necessary because the 35 percent corporate tax rate is high in relation to other countries.
This is not a new trend. In fact, the 80s and 90s featured an especially high number of corporations moving their money to places such as Bermuda and the Cayman Islands, where there are no taxes at all. More recently, a number of companies have moved funds to Switzerland, in particular to a small town in the Alps called Zug. Zug's taxes are somewhere between 15 and 16 percent, making them substantially less than those charged in the United States.
Transocean, the Texas company that owned the BP rig involved in the Gulf oil spill last year, moved its operations to Switzerland two years ago. Though they kept around 1,300 of their employees in Houston and moved only 12 or 13 to Switzerland, they are able to register as a Swiss company, thereby saving $2 billion in taxes. Under both Swiss and US tax law, this is perfectly legal behavior.
Pushing to Shut Down Tax Havens
Texas Democratic Congressman Lloyd Doggett is trying to change US tax laws so that it would no longer be legal for corporations to shelter income in this manner. According to Congressman Doggett's newly proposed legislation, companies would be taxed based on where their decision makers and management actually reside, not simply on where they file.
Faced with just the mere threat of Doggett's legislation, Transocean moved all of its top management to Switzerland. The company's top ten executives now all live in Geneva.
However, many corporations and their allies blame the existing tax structure for the habits of these companies. These individuals argue that the problem lies with the excessive rates of tax in the United States, which all but force companies to move their operations overseas.
In all cases, wherever the blame may lie, these are jobs that are not going to American workers. Nor is the American government benefiting from any kind of taxation on these companies. However, at present there seems to be little incentive for corporations to keep their operations €" and their tax dollars €" on US soil.
Every year the government loses out on over $60 billion a year in money that doesn't come in from American corporations because of loopholes in the immensely complicated tax code or various tax havens.
Corporate Tax Havens Overseas
One major way that corporations avoid paying their taxes is by moving profits overseas. Corporations claim this action is necessary because the 35 percent corporate tax rate is high in relation to other countries.
This is not a new trend. In fact, the 80s and 90s featured an especially high number of corporations moving their money to places such as Bermuda and the Cayman Islands, where there are no taxes at all. More recently, a number of companies have moved funds to Switzerland, in particular to a small town in the Alps called Zug. Zug's taxes are somewhere between 15 and 16 percent, making them substantially less than those charged in the United States.
Transocean, the Texas company that owned the BP rig involved in the Gulf oil spill last year, moved its operations to Switzerland two years ago. Though they kept around 1,300 of their employees in Houston and moved only 12 or 13 to Switzerland, they are able to register as a Swiss company, thereby saving $2 billion in taxes. Under both Swiss and US tax law, this is perfectly legal behavior.
Pushing to Shut Down Tax Havens
Texas Democratic Congressman Lloyd Doggett is trying to change US tax laws so that it would no longer be legal for corporations to shelter income in this manner. According to Congressman Doggett's newly proposed legislation, companies would be taxed based on where their decision makers and management actually reside, not simply on where they file.
Faced with just the mere threat of Doggett's legislation, Transocean moved all of its top management to Switzerland. The company's top ten executives now all live in Geneva.
However, many corporations and their allies blame the existing tax structure for the habits of these companies. These individuals argue that the problem lies with the excessive rates of tax in the United States, which all but force companies to move their operations overseas.
In all cases, wherever the blame may lie, these are jobs that are not going to American workers. Nor is the American government benefiting from any kind of taxation on these companies. However, at present there seems to be little incentive for corporations to keep their operations €" and their tax dollars €" on US soil.
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