Print this post.By Julianne Escobedo Shepherd, AlterNet
Posted on April 19, 2011
Crossposted with http://www.alternet.org/story/150598/how_12_multinational_corporations_avoid_paying_taxes
In January, Barack Obama named Jeffrey R. Immelt, General Electric’s chief executive, to head the President’s Council on Jobs and Competitiveness. “He understands what it takes for America to compete in the global economy,” Obama said. It figures.
OVER THE PAST MONTH, General Electric has been held up as the pinnacle of corporate vampirism –– the world’s largest corporation in the world’s lowest tax bracket. But it’s not just GE that’s bilking the system and paying zero dollars in taxes.
A new report out today illustrates that at least 11 other multinational, billion-dollar corporations managed to get a free pass from the IRS – and not only that, but while average Americans scraped their piggy banks to pay hefty taxes on paltry paychecks, many of these companies actually got a refund. Want to know how they pulled that off? By the fatcat’s swindle: lobbying, campaign contributions, and other legal gladhanding that helps them exploit corporate loopholes and keeps their pockets flush while the rest of us struggle to get by.
The GE “tax success story”, straight from the establishment’s paper of record:
G.E.’s Strategies Let It Avoid Taxes Altogether
By DAVID KOCIENIEWSKI
The New York Times
General Electric, the nation’s largest corporation, had a very good year in 2010.
The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.
Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.
That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.
Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress. [Read the whole story]
Ordinary Americans lack the kind of money needed to shop at this store.
The campaign reform group Public Campaign has released a report called “Artful Dodgers,” identifying 12 corporations – including GE – that used these tactics to avoid paying any taxes while reaping huge benefits. More disturbingly, the report notes they collectively spent over a billion dollars influencing politicians to make Washington more corporate-friendly. As the report points out, the money invested to sway groups such as the House Ways and Means Committee and the Senate Finance Committee has been wildly successful. Legislation from both parties has created these tax loopholes, while providing incentives that effectively destroy the American workforce. Public Campaign:
According to the non-partisan Government Accountability Office (GAO), eighty-three of the 100 largest publicly traded U.S. corporations utilize such tax havens to reduce their U.S. tax liability. Ironically, these accounting tricks aren’t available for companies that only do business in the United States, so Congress in effect is providing tax incentives to ship jobs overseas and dismantle the middle class.
Public Campaign (PC) researched “the lobbying expenses and political contributions of 12 large, well-known corporations, their political action committees (PACs), and their executives,” and broke them down into four categories: Oil, Banks, Transportation, and Telecommunication and Technology.
Let’s use an example from the latter category first, since GE falls into it. While the general brouhaha surrounding the company involved its tax-free 2010, PC notes that it has in fact not paid any taxes since 2006, despite raking in $26 billion since then. Since 2006, it has collected tax refunds of $4.1 billion. Further, despite being “one of the worst polluters in the world,” GE has gained these benefits from aggressively lobbying for green tax breaks for using wind turbines. Its zealousness in political contributions has probably helped; in 10 years, GE, employees and PACs have given more than $13 million in federal contributions, along with a whopping $205 million on lobbying.
GE’s partner in the telecommunications category, Verizon, is no less absurd. PC reminds us that last year the company caused an outrage when it “exploited a tax loophole to sell 4.8 million rural phone lines at a profit while avoiding $600 million in taxes.” The shocking amount it ponied up in federal taxes? Zilch. And like GE, Verizon’s quite generous when it comes to contributions to committees that control taxation and regulation: in 10 years, it’s dropped $12 million in campaign contributions, and another $131 million on lobbying. That’s a lot, but still less than it would have had to pay in taxes if it was held to the same standards as the rest of us.
So who else made the hotlist? Aside from the lucrative oil industry – ExxonMobil, Chevron, ConocoPhillips, Valero – there were a few surprises on the transportation list – Boeing, sure, but also FedEx and Carnival Cruise Lines? But perhaps the most infuriating corporations included are big-time recipients of corporate welfare – Bank of America, Citi, and Goldman Sachs, which helped decimate the housing market, were all rescued by the taxpayer-supported bailout but managed to pay little to no taxes in 2010. Last year, Bank of America made $4.4 billion…and received a refund of $1.9 billion.
Clearly, the moral of this story is that these corporations are not sneaking around the government, slithering through back alleys in order to avoid paying taxes. They are essentially lobbying our government – individuals we elected – into submission, tipping the tax brackets in their favor on the backs of average, everyday Americans. Congress wants to make huge budget cuts in social programs that help us in myriad ways, and yet many of the same politicians would rather punish the poor than make corporations pay their fair share. As PC points out:
Elected officials across the political spectrum are talking about the need for shared sacrifice to reduce our deficit. Both Budget Committee Chairman Paul Ryan (R-Wisc.) and President Obama have talked about getting rid of special interest tax loopholes. But, talk doesn’t equal action. And it’s not going to happen as long as well-heeled companies like G.E. or Chevron are able to use millions in lobbying and campaign contributions to advocate for the creation of loopholes and tax breaks, and against their closure. Reforming our tax code won’t happen when every line in it has a special interest that will push back against any increase.
The proposed budget looks a little different to you now, doesn’t it? Read the full report at Public Campaign.
Julianne Escobedo Shepherd is an associate editor at AlterNet and a Brooklyn-based freelance writer and editor. Formerly the executive editor of The FADER, her work has appeared in VIBE, SPIN, New York Times and various other magazines and Web sites.
© 2011 Independent Media Institute. All rights reserved.
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