WASHINGTON – A new report on corporate tax havens overseas and how much they cost the U.S. Treasury in revenues when firms stash profits abroad has prompted two lawmakers, Sen. Bernie Sanders and Rep. Jan Schakowsky, to move against the tax dodgers with legislation outlawing the companies’ practices.
If the measure became law, the bill by the Independent Vermont senator and the Democratic representative from Chicago’s North Side and near-north suburbs could reap billions of dollars and help close federal red ink, the two say.
“Recently, the Business Roundtable” – the lobby for the firms the report covers – “came out with a plan to raise the eligibility age for Medicare and Social Security to 70, cut Social Security and veterans’ benefits, and increase taxes on working families,” Sanders and Schakowsky explained.
But those Business Roundtable firms avoided $128 billion in U.S. taxes in 2010 alone by sheltering their profits abroad, the report says. The IRS sent them $6.5 billion in refunds, combined, that year. So instead of hammering workers, “It’s time for these corporate and Wall Street tax dodgers to pay their fair share in taxes and bring jobs back home to America,” the lawmakers add. Their bill would tax funds firms sent to havens.
AFL-CIO President Richard Trumka and Service Employees President Mary Kay Henry endorsed the Sanders-Schakowsky legislation. It “would increase investment, employment and wages in the United States,” Trumka said. It would “raise revenue, restore fairness to our tax code and create good jobs in the U.S.,” Henry added.
General Electric was the big winner in using tax havens, the report shows. It avoided $35.7 billion in U.S. taxes by putting $102 billion in 2010 profits in “at least 14” tax havens in Bermuda, Singapore and Luxembourg. GE actually got a $3.3 billion IRS refund that year, the most recent year that data were available. It also obtained $16 billion in credit from the Federal Reserve during the financier-caused 2008 crash.
Meanwhile, GE closed 30 U.S. factories, chopped 34,000 American jobs, and added 25,000 jobs overseas since 2001, it says. It quotes GE CEO Jeffrey Immelt telling investors in 2002: “When I am talking to GE managers, I talk China, China, China, China, China. You need to be there. The cost basis is extremely attractive.”
Other big winners among the Business Roundtable’s corporate members in terms of avoiding U.S. taxes by using foreign tax havens were, in order: Microsoft ($19.4 billion avoided), Merck ($15.5 billion), Cisco Systems ($14.5 billion), QualComm ($5.8 billion), JP Morgan Chase ($4.9 billion), Caterpillar ($4.56 billion), Corning ($3.78 billion), Dow Chemical ($3.5 billion), Goldman Sachs ($3.32 billion), Honeywell ($2.84 billion), Alcoa ($2.9 billion), Bank of America ($2.5 billion), Eaton ($2.24 billion), ThermoFisher Scientific ($1.65 billion) and UPS ($1.12 billion).
Photo: Tony Pecinovsky/PW