On the Huffington Post, Arianna Huffington writes angrily about how big corporations take advantage of low tax rates overseas.
83 of the 100 largest publicly-traded companies in the country -- including AT&T, Chevron, IBM, American Express, GE, Boeing, Dow, and AIG -- had subsidiaries in tax havens… Morgan Stanley had 273 subsidiaries in tax havens… Citigroup had 427… Bank of America had 115… Goldman Sachs had 29...
The widespread use of tax havens shows that companies are desperate to avoid high corporate taxes. That makes sense. Among industrialized countries, the U.S. has the second highest rate. It’s high enough that AEI researchers say that reducing it would actually increase revenue, because fewer companies would relocate overseas.
Arianna has a different solution. She wants the Senate to pass the “American Jobs and Closing Tax Loopholes Act” because it:
clamps down on some of they ways corporations hide their income offshore to avoid paying U.S. taxes. Even though practically every House Republican voted against it, the bill passed 215 to 204.
The bill is a case study in fiscal irresponsibility. While it is expected to raise $43 billion in extra taxes, it increases spending by much more: $127 billion. That goes for important things like extending a “Cotton Trust Fund”, which gave “payments to U.S. shirt makers and U.S. cotton fabric and yarn producers, and created a pima cotton promotion program.” There’s also a provision to ignore inflation-adjustments to entitlement payments whenever deflation would reduce payments. And there’s a $40 billion provision to extend 99-week unemployment benefits by another 6 months.
The bill’s sponsor happens to be New York Rep. Charlie Rangel, the same Congressman who sponsored the ludicrous and complicated “electric vehicle” bill that forced you taxpayers to buy me a free golf cart (I did give it away to a charity) and the same congressman who is so confused by the tax laws that he has his own record of tax evasion.
If we want corporations to stop manipulating our tax system, the answer is to switch to flatter and simpler taxes, not new complexity.