by Dave Johnson
A huge, huge giveaway of tax money to giant corporations is rolling down the tracks at us. If it happens, this tax giveaway would be second only to the bank bailouts on the list of schemes to give money to private corporations. (Except, with the bailouts we got some of that money back.)
Giant, multinational companies owe us up to $700 billion in taxes they have been avoiding paying. Now they say they’ll let us have some of the tax money they owe us if we let them off from paying it all. For some reason, just telling them to pay their taxes is off the table.
How The Scam Works
Here’s how this particular tax-avoidance scam works. Companies that make profits outside of the U.S. owe taxes on that money the same way they owe taxes on money made here. But a loophole lets them avoid, or “defer,” paying those taxes until they “bring the profits back into the U.S.,” also known as “repatriating” the profits.
The idea behind letting them defer taxes is that the companies might need to invest in things outside the U.S. that make them even more money later. This is a win-win for all of us because American companies making more is better for us and means even more tax revenue later.
But many companies have started scamming on that deferral loophole by just keeping profits outside the country, period. They’re not using it to invest, they’re just scamming to avoid taxes. Even worse, many companies are inventing all kinds of ways to make it look like profits made here are made outside the country.
This scam of moving profits out of the country has gotten so bad and has been going on long enough that more than $2 trillion is now held outside the country. At the top 35 percent tax rate this means up to $700 billion in taxes already owed are being kept from use by We the People. Even worse, this gives these scamming companies a financial advantage over good, patriotic companies that pay their taxes.