Go offshore young man and avoid
paying taxes. Plunder at will in those foreign lands, and if you get in trouble,
Uncle Sam will come rushing to your assistance, diplomatically, financially and
militarily, even if you have managed to avoid paying for those government
services. Just pretend you’re a multinational
corporation.
That’s the honest instruction for
business success provided by 60 of the largest U.S. corporations that, according
to a Wall Street Journal analysis, “parked a total of $166 billion offshore last
year” shielding more than 40 percent of their profits from U.S. taxes. They all
do it, including Microsoft, GE and pharmaceutical giant Abbott Laboratories.
Many, like GE, are so good at it that they have avoided taxes altogether in some
recent years.
But they all still expect Uncle
Sam to come to their aid with military firepower in case the natives abroad get
restless and nationalize their company’s assets. We still have a blockade
against Cuba because Fidel Castro more than a half century ago dared seize an
American-owned telephone company. During that same period, we have consistently
intervened to maintain the lock of U.S. corporations on the world’s resources,
continuing to the present task of making Iraq and Libya safe for our oil
companies.
America’s multinational
corporations still need the Navy to protect shipping lanes and the Commerce
Department to safeguard U.S. copyrights. They also expect the Federal Reserve
and Treasury Department to intervene to provide bailouts and cheap money when
the corporate financial swindlers get into trouble, like GE, which almost went
aground when its GE Capital financial wing got caught in the great banking
meltdown.
They want a huge U.S. government
to finance scientific breakthroughs, educate the future workforce, sustain the
infrastructure and provide for law and order on the home front, but they just
don’t feel they should have to pay for a system of governance, even though it
primarily serves their corporate interests. The U.S. government exists primarily
to make the world safe for multinational corporations, but those firms feel no
obligation to pay for that protection in return.
Think of that perfectly legal and
widespread racket when you go to pay your taxes in the next weeks, and consider
that you have to make up the gap left by the big boys’ antics. Also, when you
contemplate the painful cuts coming because of the sequester that undoubtedly
will further destabilize the economy, remember that, as the Wall Street Journal
estimated, the tax savings of just 19 of those companies would more than cover
the $85 billion in spending reductions triggered by the congressional budget
impasse.
The most skilled at this con game
are the health care and technology companies, which, as a Senate investigation
last year revealed, have become quite expert at shifting marketing rights and
patents offshore to low-tax countries. Microsoft boosted its foreign holdings by
$16 billion last year, and by the end of the company’s fiscal year on June 30,
2012, had $60.8 billion stashed internationally. Through creative accounting,
Microsoft was able to claim that only 7 percent of its pretax profit last year
was domestically generated.
Oracle increased its foreign
holdings by one-third, including new subsidiaries in low-tax Ireland, and
thereby was able to add a cool $272 million to the company’s bottom line by
avoiding U.S. taxes. Abbott estimates that it saved $1.6 billion in U.S. taxes
through its operations in more than a dozen countries. By moving $8.1 billion of
its profits overseas, Abbott was able to claim a pretax loss on its U.S.
operations. Johnson & Johnson, another health industry giant, has almost all
of its cash-$14.8 billion out of $14.9 billion-abroad, yet still claims to be a
U.S. company.
One of the longtime leaders in
offshore tax avoidance has been that once-American-as-apple-pie company GE,
which in a more innocent time hired Ronald Reagan to advertise its wares. Now GE
has nearly two-thirds of its jobs abroad, avoided U.S. taxes in the previous two
years and has $108 billion stashed overseas.
Two years ago, President Obama
appointed GE CEO Jeffrey Immelt to chair his Jobs Council, despite the fact that
Immelt had cut his company’s U.S. workforce by a fifth. GE’s expertise is no
longer in appliance manufacturing, a division Immelt has tried to shed, but
rather in financial manipulation.
GE Capital was a leader in the
financial scams that still haunt the U.S. economy, and Immelt has been most
effective in lobbying Washington politicians to rig the tax laws to benefit his
and other multinational corporations. He has created some jobs, but
unfortunately, they are abroad, along with his company’s untaxed profits.
For all these multinational
corporations, the love of profit trumps loyalty to
country.
AHT/ARA
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