Repatriating Taxes: An Unwarranted Gift to Unpatriotic Corporations

June 14 is Flag Day. It marks an important day in the nation’s history: the Continental Congress passed a resolution that established the nation’s first flag on June 14, 1777. This used to be a national secular holiday, when most households showed their patriotism and loyalty to the United States by flying its flag. But the nation doesn’t seem to be in a celebratory mood these days, and Flag Day may not offer a lift to our national pride.

We have a growing pile of unmet needs and yet are constantly told we can’t afford to address them. In recent days, bridges along major roadways have been closed because the lack of ongoing maintenance has made them too unsafe to travel. We’ve watched as the number of long-term unemployed denied access to emergency unemployment benefits has passed 3 million. And we’ve seen the annual struggle of cities seeking funds for summer jobs programs for youth since federal funding has dried up.

We are told there is no money for these important public services.

And yet, U.S. corporations reported record profits and the median pay of large-company CEOs has reached record levels. Corporate profits as a share of the total economy exceeded 12 percent last year while their share of federal taxes as a percent of the economy shrank to less than two percent, near an all-time low. A recent study by Citizens for Tax Justice found that, over the last five years, the average large corporation in America paid less than 20 percent of its profits in federal income taxes, substantially less than the posted 35 percent corporate tax rate and less than many middle-class families pay.

In the prosperous 1950s, under the leadership of Republican President Dwight Eisenhower, corporate profits accounted for around ten percent of the economy and their federal taxes accounted for more than four percent of the economy. Corporations, with fewer profits in those days, were asked to provide more toward the common good through the taxes they paid. They still had plenty of money to reinvest in their companies and prosper, and their taxes helped pay for public services like schools, roads, and investments in basic research that kept our nation strong and competitive.

Today, more and more companies are abandoning their incorporation in the U.S. and shifting their registrations to foreign countries. They are doing so to avoid paying U.S. taxes. Pfizer’s recently abandoned attempt to buy Britain’s Astra Zeneca was in large part about reducing the drug giant’s tax bill. Later this year, Walgreen’s shareholders will be asked to support a more direct path, simply swapping their registration as a U.S. corporation for new corporate papers issued by Switzerland. Efforts by these corporations to lower their tax bills mean they are choosing to contribute less to the upkeep of America.

Hundreds of other U.S. corporations are taking a simpler path, using gaping loopholes in the corporate tax code to legally shift profits earned  in the United States to places like the Cayman Islands, Bermuda, or Lichtenstein, where those profits are lightly taxed, if at all. Seventy-two percent of Fortune 500 corporations have subsidiaries in offshore tax havens, according to new research by U.S. PIRG and Citizens for Tax Justice. Offshore tax abuse by corporations costs the U.S. Treasury $90 billion a year, according to Reed College Professor Kimberly Clausing.

Now many in Congress – from both political parties – are seeking to recycle an old idea that has failed before. They say we need to give corporations a big tax break to entice them to bring some of the $2 trillion they have stashed offshore back to America to invest in this country. They say we can use the trickle of tax money that comes from this one-time deal to repair our nation’s roads and bridges.

This construction is wrong on three counts. First, the premise that those funds are “trapped offshore” and not available for investment at home is false. Most large companies are able to use these offshore funds as collateral to obtain low-cost loans, which means that while their profits technically remain offshore and therefore untaxed, they are able to use these funds to make investments in the U.S.

Second, giving corporations a tax holiday to pay for infrastructure projects forces taxpayers to pay twice – once for the tax break and again for the cost of the infrastructure project. A recent Joint Committee on Taxation report estimated that a tax holiday similar to the one passed by Congress in 2004 would cost almost $96 billion over ten years. Using trickles of funding from corporate tax holidays is a really expensive way to pay for roads and bridges.  It is far cheaper to pay for infrastructure spending directly out of tax revenues. 

Third, such an approach is a one-time fix to a problem that needs a long-term solution.

A much better approach would be to close the loopholes that have turned the tax code into a sieve that leaks tax revenue from the public treasury. Instead of generating $100 billion of new money for infrastructure once, we need a steady flow. Closing offshore tax loopholes would deliver hundreds of billions of dollars of tax revenue to help fix our roads, improve our kids’ schools, and strengthen Social Security.

Closing offshore loopholes would raise vital public revenue, not by raising corporation tax rates, but by demanding that corporations that rely on taxpayer-funded public services for their business success pay their fair share and in so doing honor the nation and the flag that have made them great, rather than running into the arms of a tax haven nation that provides them nothing other than a better deal on taxes. 

This piece was also published by Common Dreams. It is printed here under a Creative Commons license.

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Boehner should be hung for the harm he has caused good American citizens and the damage he has cost our economy. He is only concerned with getting the Boehner/Koch Keystone XL Pipeline approved for the Koch brothers so they will line his pockets with dirty cash. This is boarderline treason and should be addressed as such.
When did corrupt become the standard in DC? Why do the people just sit back and accept this injustice. This should be a vote conducted by the people as it is the people who fund it, not crooked politicans that only want to line their pockets with "contributations" ... dirty cash. The people of this country would support this EUC bill by overwhelming numbers, Most Americans fear losing their job and do not want to think about others starving.
It will take a civil war for the citizens to take back DC and restore our political system to what it once was ... fair for all and not about lining politicans pockets. What was once the Mighty United States of America is being brought to it's knees by crooked politicans quickly and the people are just sitting back watching. Time for action.
SADLY TO SAY THAT THE STOOGES IN D.C. ARE AND HAVE FINALLY STARTED TO PUT AND DRIVE THE LAST NAIL ON UNCLE SAM'S AND THE U.S.A.'S COFFIN! THIS COUNTRY IS NOT GREAT ANYMORE! IT'S A BIG LIE AND SMOKESCREEN NOW. JUST LOOK AROUND YOU OUT IN THE NOT SO GOOD U.S.A., YOU WILL SEE HOMELESSNESS EVERYWHERE AND GROWING BY THE MONTH. FOOD BANKS FLOODED BY TOO MANY STARVING PEOPLE OF ALL RACES, CREEDS, COLORS ETC.....! THRIFT STORES AND SECOND HAND STORES BOOMING IN BUSINESS AS THE MEGA BOX STORES LIKE WAL- MART, TARGET, KMART, SEARS, ETC...... ON AND ON AND ON CLOSING STORES, LAYING PEOPLE OFF, CUTTING HOURS, BENEFITS, PERKS AND GOING OVERSEAS OR OUT OF THE COUNTRY. THEY SAY AND LIE ON 6.2% UNEMPLOYMENT!!!? IT'S TRULY MORE LIKE 15% TO 30% TO EVEN 40 TO 50 % DEPENDING ON WHERE YOU LIVE IN THIS DECAYING SOON TO BE 3RD WORLD COUNTRY, YOUR COLOR, YOUR RACE, YOUR EDUCATION, HOW WELL CONNECTED YOU ARE, IN ALL 50 STATES. SOME STATES ARE BETTER AND SOME WORSE, BUT THE BOTTOM LINE IS WE HAVE BEEN SOLD OUT PRETTY MUCH BY OUR OWN KIND IN D.C. AND THEY COULD CARE LESS ABOUT US ALL! THEY ARE RICH AND WE ARE NOT, SO UNLESS YOU ARE PART OF THEIR FILTHY RICH CLUB, CLIQUE, CRONIE, GROUPIE, ETC... THEY WILL NOT HELP YOU AT ALL, AT ALL!!! THEY ARE A RICH CLUB AND YOU AIN'T IN IT!!!!
I am deeply saddened by the slow death of our once great nation. A nation that was built by the sweat of it's blue collar workers and the" lion's share" tax contributions of it's middle class. What will these fat cat bureaucrats do once they have succeeded in making us extinct with actions taken like their poisonous political agendas such as the North American Free Trade Agreement that decimated America's small business and strangling any start up companies before they can be launched... China and South America are laughing all the way to the bank. Oh and what about the damage these politicians do with the actions they DO NOT TAKE!? at the end of December of 2013 Congress allowed Emergency Unemployment Compensation (EUC) to expire putting at that time 1.3 million Americans and their families into a downward spiral the ranks of these unemployed without benefits have grown to now THREE MILLION and AS AMERICANS WE STILL HAVE THE RIGHT TO VOTE! My family lost our home to foreclosure and we lost everything else to chapter seven bankruptcy. What I cannot understand is why the GOVERNMENT is holding on to $13,367.00 OF MY F&%king MONEY!? I paid into these Unemployment Benefits since I started working at the age of SIXTEEN and I was never UNEMPLOYED until at the age of 50 our Nation's great economy drove the company I was working for to DOWNSIZE! And then FOR THE FIRST TIME IN MY LIFE I was Unemployed and to top it off I was unable to find a job! I DO NOT ASK FOR A HAND OUT I JUST WANT WHAT I PAID IN TO THE SYSTEM $13,367.00 after all this is MY MONEY.