For decades now the social contract that existed between American workers and businesses has been unraveling at an alarming rate. There are many exceptions of excellent businesses that treat their workers fairly and pay their fair share of taxes but every year the rate of CEO pay and perks increases and the pay and benefits of the workers stays flat. The federal minimum wage stays the same as consumer prices escalate. Companies that fired workers during the Great Recession and forced their remaining workforce to work longer hours for the same or less pay have found they can do quite well with a smaller workforce even as their business rebounds by hiring part time workers or consultants at a fraction of the cost.
We hear endless stories of large multi-national companies that pay little or no taxes even though the official federal tax rate is 35 percent. Unless your tax firm is Curly, Moe and Larry there is a good chance you can get away with dodging most or all taxes. It used to be that the U.S. was the home of most of the world's largest companies but now 17 of the 20 largest companies are located elsewhere. Why? Certainly, other countries have become industrial powerhouses but many of these offshore companies are really American companies that have been "bought" by smaller companies located in countries with significantly lower tax rates. This is called INVERSION: an American company becomes a subsidiary of a smaller company in a country with lower tax rates. Fifty companies have taken the inversion plunge in the past three years. You can visualize the dollars being sent overseas with the push of a button on a computer.
It is estimated that US companies have TWO TRILLION DOLLARS STASHED OVERSEAS. Imagine that! Think of how much tax money our treasury loses every year. Fiscal conservatives complain about how we do not have enough money to pay for Medicare, Social Security, Medicaid, education, fixing our infrastructure and affordable housing. Yet, they want to protect these companies which are stretching the tax rules and costing taxpayers who play by the rules billions of needed dollars.
Inversion is a perversion of the true American Spirit. Lowering the corporate tax rate to 25 percent as many have suggested will not in itself solve the problem. If your company has found a way through inversion to dodge the corporate tax rate of 35 percent why not dodge the 25 percent rate? Why pay anything? As long as the myriad of tax loopholes remain including inversion there is no incentive to be loyal Americans and pay your corporate taxes. Your investors will be horrified and you just might be fired for incompetence.
We hear endless stories of large multi-national companies that pay little or no taxes even though the official federal tax rate is 35 percent. Unless your tax firm is Curly, Moe and Larry there is a good chance you can get away with dodging most or all taxes. It used to be that the U.S. was the home of most of the world's largest companies but now 17 of the 20 largest companies are located elsewhere. Why? Certainly, other countries have become industrial powerhouses but many of these offshore companies are really American companies that have been "bought" by smaller companies located in countries with significantly lower tax rates. This is called INVERSION: an American company becomes a subsidiary of a smaller company in a country with lower tax rates. Fifty companies have taken the inversion plunge in the past three years. You can visualize the dollars being sent overseas with the push of a button on a computer.
It is estimated that US companies have TWO TRILLION DOLLARS STASHED OVERSEAS. Imagine that! Think of how much tax money our treasury loses every year. Fiscal conservatives complain about how we do not have enough money to pay for Medicare, Social Security, Medicaid, education, fixing our infrastructure and affordable housing. Yet, they want to protect these companies which are stretching the tax rules and costing taxpayers who play by the rules billions of needed dollars.
Inversion is a perversion of the true American Spirit. Lowering the corporate tax rate to 25 percent as many have suggested will not in itself solve the problem. If your company has found a way through inversion to dodge the corporate tax rate of 35 percent why not dodge the 25 percent rate? Why pay anything? As long as the myriad of tax loopholes remain including inversion there is no incentive to be loyal Americans and pay your corporate taxes. Your investors will be horrified and you just might be fired for incompetence.