Another example of how the ultra-wealthy and big corporations avoid paying their fair share of the tax burden - and they are supposedly paying too much? - Whatever...
I guess collecting money from the lower 40% of income earners is more important in some people's minds on this site, and elsewhere...
June 12, 2007
The Biggest Scam in the World
Closing Down the Tax Haven Racket
By RALPH NADER
Lucy Komisar of the Tax Justice Network-USA (taxjustice-usa.org) spoke at the Conference on Taming the Giant Corporation last week about "Closing Down the Tax Haven Racket." Her words were so compelling that the rest of this column is devoted to excerpts from her presentation:
"The tax haven racket is the biggest scam in the world. It's run by the international banks with the cooperation of the world's financial powers for the benefit of corporations and the mega-rich. [M]ost Americans, including progressive activist Americans, don't know what I'm going to tell you. And that's part of the problem.
"Tax havens, also known as offshore financial centers, are places that operate secret bank accounts and shell companies that hide the names of real owners from tax authorities and law enforcement. They use nominees, front men. Sometimes offshore incorporation companies set up the shells. Sometimes the banks do it. Often someone will use a shell company in one jurisdiction that owns a shell in another jurisdiction that owns a bank account in a third. That's called layering. No one can follow the paper trial.
"Offshore is where most of the world's drug money is laundered, estimated at up to $500 billion a year, more than the total income of the world's poorest 20 percent. Perhaps another $500 billion comes from fraud and corruption.
"Those figures fit with [International Monetary Fund] numbers that as much as $1.5 trillion of illicit money is laundered annually, equal to two to five percent of global economic output.
"Wall Street wants this money. The markets would hurt, even shrivel without that cash. That's why Robert Rubin as Treasury Secretary had a policy, as Joseph Stiglitz told me, not to do anything that would stop the free flow of money into the US. He was not interested in stopping money laundering because the laundered funds ended up in Wall [Street], maybe in Goldman Sachs where he had worked, or Citibank, where he would work.
"Attempts to find laundered funds are usually dismal failures. According to Interpol, $3 billion in dirty money has been seized in 20 years of struggle against money laundering -- about the amount laundered in three days.
"The other major purpose of offshore is for tax evasion, estimated to reach another $500 billion a year.
"That's how corporations and the rich have opted out of the tax system.
"They have sophisticated mechanisms. There's transfer pricing. A company sets up a trading company offshore, sells its widgets there for under market price, the trading company sells it for market price, the profits are offshore, not where they really were generated.
"Two American professors, using customs data, examined the impact of over-invoiced imports and under-invoiced exports for 2001. Would you buy plastic buckets from the Czech Republic for $973 each, tissues from China at $1874 a pound, a cotton dishtowel from Pakistan for $154, and tweezers from Japan at $4,896 each!
"U.S. companies, at least on paper, were getting very little for their exported products. If you were in business, would you sell bus and truck tires to Britain for $11.74 each, color video monitors to Pakistan for $21.90, and prefabricated buildings to Trinidad for $1.20 a unit.
"Comparing all claimed export and import prices to real world prices, the professors figured the 2001 U.S. tax loss at $53.1 billion.
"Or a company sets up subsidiaries in tax havens to "own" logos or intellectual property. Like Microsoft does in Ireland, transferring software that was made in America, that benefited by work done by Americans, to Ireland so Microsoft can pay taxes there (at 11%) instead of here (at 35%). Why is Ireland getting the benefit of American-created software? It's legal. We need to change the law.
"When logos are offshore, the company pays royalties to use the logo and deducts the amount as expenses. But the payments are not taxed or are taxed minimally offshore where they are moved. When Cheney ran Halliburton, it increased its offshore subsidiaries from 9 to at least 44.
"Half of world trade is between various parts of the same corporations. Experts believe that as much as half the world's capital flows through offshore centers. The totals held offshore include 31 percent of the net profits of U.S. multinationals.
"The whole collection of tax scams is why between 1989 and 1995, of US and multi-national corporations operating in the United States, with assets of at least $250 million or sales of at least $50 million, nearly two-thirds paid no U.S. income tax.
"In 1996-2000, Goodyear's profits were $442 million, but it paid no taxes and got a $23-million rebate. Colgate-Palmolive made $1.6 billion and got back $21 million. Other companies that got rebates in 1998 included Texaco, Chevron, PepsiCo, Pfizer, J.P. Morgan, MCI Worldcom, General Motors, Phillips Petroleum and Northrop Grumman. Microsoft reported $12.3 billion U.S income in 1999 and paid zero federal taxes. (In two recent years, Microsoft paid only 1.8 percent on $21.9 billion pretax U.S. profits.)
"During the 1950s, U.S. corporations accounted for 28 percent of federal revenues. Now, corporations represent just 11 percent.
"Those unpaid taxes can buy a lot of politicians and power. When Nixon needed money to pay the Watergate burglars, he got it from some corporate offshore bank accounts.
"The system has given the big banks and corporations and the super-rich mountains of hidden cash they use to control our political systems.
"The offshore system must be dismantled.
"So why isn't the progressive movement doing something about this? This is a case where some people in Congress are ahead of the activists. There are a handful of Democrats like Senators Levin (MI), Dorgan (ND) and Conrad (ND), like Rep. Doggett (TX), who are speaking out and introducing legislation. But there is no movement behind them. And while Obama has signed onto the Levin Stop Tax Haven Abuse Act, Clinton, Biden and Dodd have not."
Ms. Komisar spreads out the proposed strategies at taxjustice-usa.org. One or more are structured so that you can play a part in furthering them toward adoption.
As she concluded: "Let's get the country to tell the corporations that the taxes they are dodging is our money."
I guess collecting money from the lower 40% of income earners is more important in some people's minds on this site, and elsewhere...June 12, 2007
The Biggest Scam in the World
Closing Down the Tax Haven Racket
By RALPH NADER
Lucy Komisar of the Tax Justice Network-USA (taxjustice-usa.org) spoke at the Conference on Taming the Giant Corporation last week about "Closing Down the Tax Haven Racket." Her words were so compelling that the rest of this column is devoted to excerpts from her presentation:
"The tax haven racket is the biggest scam in the world. It's run by the international banks with the cooperation of the world's financial powers for the benefit of corporations and the mega-rich. [M]ost Americans, including progressive activist Americans, don't know what I'm going to tell you. And that's part of the problem.
"Tax havens, also known as offshore financial centers, are places that operate secret bank accounts and shell companies that hide the names of real owners from tax authorities and law enforcement. They use nominees, front men. Sometimes offshore incorporation companies set up the shells. Sometimes the banks do it. Often someone will use a shell company in one jurisdiction that owns a shell in another jurisdiction that owns a bank account in a third. That's called layering. No one can follow the paper trial.
"Offshore is where most of the world's drug money is laundered, estimated at up to $500 billion a year, more than the total income of the world's poorest 20 percent. Perhaps another $500 billion comes from fraud and corruption.
"Those figures fit with [International Monetary Fund] numbers that as much as $1.5 trillion of illicit money is laundered annually, equal to two to five percent of global economic output.
"Wall Street wants this money. The markets would hurt, even shrivel without that cash. That's why Robert Rubin as Treasury Secretary had a policy, as Joseph Stiglitz told me, not to do anything that would stop the free flow of money into the US. He was not interested in stopping money laundering because the laundered funds ended up in Wall [Street], maybe in Goldman Sachs where he had worked, or Citibank, where he would work.
"Attempts to find laundered funds are usually dismal failures. According to Interpol, $3 billion in dirty money has been seized in 20 years of struggle against money laundering -- about the amount laundered in three days.
"The other major purpose of offshore is for tax evasion, estimated to reach another $500 billion a year.
"That's how corporations and the rich have opted out of the tax system.
"They have sophisticated mechanisms. There's transfer pricing. A company sets up a trading company offshore, sells its widgets there for under market price, the trading company sells it for market price, the profits are offshore, not where they really were generated.
"Two American professors, using customs data, examined the impact of over-invoiced imports and under-invoiced exports for 2001. Would you buy plastic buckets from the Czech Republic for $973 each, tissues from China at $1874 a pound, a cotton dishtowel from Pakistan for $154, and tweezers from Japan at $4,896 each!
"U.S. companies, at least on paper, were getting very little for their exported products. If you were in business, would you sell bus and truck tires to Britain for $11.74 each, color video monitors to Pakistan for $21.90, and prefabricated buildings to Trinidad for $1.20 a unit.
"Comparing all claimed export and import prices to real world prices, the professors figured the 2001 U.S. tax loss at $53.1 billion.
"Or a company sets up subsidiaries in tax havens to "own" logos or intellectual property. Like Microsoft does in Ireland, transferring software that was made in America, that benefited by work done by Americans, to Ireland so Microsoft can pay taxes there (at 11%) instead of here (at 35%). Why is Ireland getting the benefit of American-created software? It's legal. We need to change the law.
"When logos are offshore, the company pays royalties to use the logo and deducts the amount as expenses. But the payments are not taxed or are taxed minimally offshore where they are moved. When Cheney ran Halliburton, it increased its offshore subsidiaries from 9 to at least 44.
"Half of world trade is between various parts of the same corporations. Experts believe that as much as half the world's capital flows through offshore centers. The totals held offshore include 31 percent of the net profits of U.S. multinationals.
"The whole collection of tax scams is why between 1989 and 1995, of US and multi-national corporations operating in the United States, with assets of at least $250 million or sales of at least $50 million, nearly two-thirds paid no U.S. income tax.
"In 1996-2000, Goodyear's profits were $442 million, but it paid no taxes and got a $23-million rebate. Colgate-Palmolive made $1.6 billion and got back $21 million. Other companies that got rebates in 1998 included Texaco, Chevron, PepsiCo, Pfizer, J.P. Morgan, MCI Worldcom, General Motors, Phillips Petroleum and Northrop Grumman. Microsoft reported $12.3 billion U.S income in 1999 and paid zero federal taxes. (In two recent years, Microsoft paid only 1.8 percent on $21.9 billion pretax U.S. profits.)
"During the 1950s, U.S. corporations accounted for 28 percent of federal revenues. Now, corporations represent just 11 percent.
"Those unpaid taxes can buy a lot of politicians and power. When Nixon needed money to pay the Watergate burglars, he got it from some corporate offshore bank accounts.
"The system has given the big banks and corporations and the super-rich mountains of hidden cash they use to control our political systems.
"The offshore system must be dismantled.
"So why isn't the progressive movement doing something about this? This is a case where some people in Congress are ahead of the activists. There are a handful of Democrats like Senators Levin (MI), Dorgan (ND) and Conrad (ND), like Rep. Doggett (TX), who are speaking out and introducing legislation. But there is no movement behind them. And while Obama has signed onto the Levin Stop Tax Haven Abuse Act, Clinton, Biden and Dodd have not."
Ms. Komisar spreads out the proposed strategies at taxjustice-usa.org. One or more are structured so that you can play a part in furthering them toward adoption.
As she concluded: "Let's get the country to tell the corporations that the taxes they are dodging is our money."
