If they managed to do it for a long time then I guess they really know the loopholes. The government should review the tax system in order to prevent this in the future.
By Pete Kotz
By Michael Musto
By Michael Musto
By Capt. James Van Thach told to Jonathan Wei
By Kera Bolonik
By Michael Musto
By Nick Pinto
By Steve Weinstein
A court would eventually level $5 billion punitive damages against Exxon—equal to a single year's profit at the time. The company appealed, chipping away at the sanction until the Supreme Court (natch!) slashed that figure to $500 million 2008.
Yet through the miracle of the tax code, Exxon would only end up paying about $325 million. No matter how negligent a company is, court judgments are considered nothing more than a business expense, and therefore tax deductible.
Last year, Senator Patrick Leahy (D-Vermont) introduced the Protecting American Taxpayers from Misconduct Act. If a court orders damages for malfeasance, U.S. taxpayers would no longer be forced to grab a piece of the tab.
Yet even in the Democratically controlled Senate, liberals realize that exposing their corporate patrons to more tax liability will go over like a dieting booth at the county fair. Leahy's bill never made it out of committee.
2. Delaware, the Cayman Islands of America
Just outside of Philadelphia sits a tax haven so egregious the Cayman Islands complain about us. It's called Delaware, a tiny state that allows American companies to set up fake headquarters so they can avoid taxes in their own states.
Delaware does it by asking fewer questions than a needle exchange. Like the Caymans, it doesn't tax assets such as royalties, leases, trademarks, and copyrights. So U.S. companies create shell firms in Delaware, then "sell" their intellectual property to them. By leasing their own inventions from these fake companies, corporations have dodged $9.5 billion in state taxes over the last decade.
The trailblazer for such schemes was WorldCom, the famed telecommunications company that imploded in 2002 after being caught cooking its books. In one scam, WorldCom pretended to pay its Delaware shell company $20 billion in royalties for the questionable asset of "management foresight." Although there were no managers in Delaware, and no real money changed hands, WorldCom was able to reduce its state taxes by hundreds of millions.
Such scheming is so commonplace that Delaware is home to more corporations (945,326) than it is people (897,934). Even the patron saint of tax evasion, the Cayman Islands, sniffs over the state's corrupt practices.
Johnson likens the Delaware strategy to one first professed by Clyde Barrow, the Depression-era bank robber.
"Near the end of Bonnie and Clyde, they're lying around in bed after making out, and Bonnie says, 'Anything you'd do different?' And Clyde says, 'I think we shoulda lived in one state and done our bank robbery in another state,'" says the professor.
"The answer is if you're a corporation, that's exactly what you do."
The corporate blackmail exemption
Almost immediately, Bennett—who made his money by marrying the daughter of billionaire Edward Gaylord, owner of Country Music Television—asked Seattle to pony up $300 million for a new arena. The city wasn't eager because it had already spent $75 million renovating the existing arena a decade before.
Bennett decided to blackmail Seattle, using Oklahoma City as leverage. Oklahoma had no major sports team of its own. So its otherwise conservative legislature offered Bennett a huge welfare package: $120 million for arena renovations and a new practice facility.
Seattle balked. Oklahoma had a new basketball team.
Yet according to the tax code, not all entitlements are created equal. While a laid off electrician still pays taxes on his $500-a-week unemployment check, Bennett didn't pay a dime on his $120 million welfare bonanza.
This exemption only sweetens corporate incentive to blackmail states and cities whenever they consider moving. Take Toyota.
In 2002, it decided to build an assembly plant for its Tundra pickup, taking advantage of cheap labor in the south. Just like Oklahoma, otherwise anti-entitlement states like Alabama, Arkansas, Mississippi, Tennessee, and Texas stumbled over one another with monstrous welfare packages.
Texas ultimately won by offering $227 million in subsidies. The state had purchased the right to host 2,000 workers at a plant in San Antonio—at a cost of $110,000 per job.
Yet for America as a whole, the deal was a spectacular loss.
It wasn't long before Toyota closed a similar plant in California, killing 4,700 jobs and shifting production to San Antonio and Canada.
The net result: Texas taxpayers forked over $227 million so America could lose 2,700 jobs. The only winner was the Japanese auto maker, which walked away with a tax-free welfare package.
Still, Congress continues to offer blackmailers this lucrative break, though it provides no benefit to the country.
"There isn't one bit of improvement whether the Toyota plant goes north or south of the Tennessee-Alabama border," Johnson says. "Yet they will make money off the fact that there is a line between them. It's just nonsense."
Unfortunately, nonsense is the calling card of the tax code. Surely even Mitt Romney can see that.
If they managed to do it for a long time then I guess they really know the loopholes. The government should review the tax system in order to prevent this in the future.
Close these tax loopholes! The corporations should pay taxes correctly and people should never vote for politicians who are beholden to these greedy corporations.
From 2008 to 2010, at least 30 Fortune 500 companies, including PepsiCo, Verizon, Wells Fargo, and DuPont, paid more for lobbyists than they did in taxes. They collectively spent $476 million sucking up to Congress, buying protection for tax breaks, loopholes, and special subsidies. Please review the # of lobbiest in the Obama administration 10. I'm Irish. No, really. In the late 1980s, Apple decided that Ireland's 12.5 percent corporate tax rate was a much more comely figure than America's 35. But Steve Jobs didn't want to move to Dublin. Fortunately, Congress allowed him to fake it. It’s very rightese you to bring up the the DEMOCRAT controlled congress during the Regan years. Question where do bills raising revenue ordinate? 9. How to lower your taxes by sitting on your ass Officially, the theory is that lowering capital gains will spur investment, creating new companies, new jobs, and prosperity for all. But most economists have found it does little to spur savings and investment. What it does do is deliver a fortune to investment bankers and financiers like Romney and Warren Buffett, both of whom pay lower rates than their secretaries. Because the take their payouts in investment throw offs. Don’t you? 8. The Sheryl Crow loophole So they passed a law allowing songwriters to avoid income taxes and sell their publishing catalogs at capital gains rates. Suddenly, Nashville's elite could not only avoid the taxes everyone else must pay, but they could also skirt their Social Security and Medicare bills. Three years later, Sheryl Crow sold her publishing rights to one of Australia's largest banks for nearly $10 million. Her estimated savings courtesy of this congressional giveaway: At this time, only wages and the sale of real property is subject to Medicare taxes, SS only to wages to a limited amount. 7. Getting rich, Facebook style When CEO wages began to spur outrage in the early Clinton years, Congress decided that companies could no longer deduct executive salaries over $1 million as a business expense. But it also created a loophole that rendered its crackdown meaningless. Exempted were "performance based" bonuses that surpass that $1 million threshold. A grand new corporate giveaway was born. Tax something and the politicians in D.C. with find away around it. 6. My other home is a yacht John Kerry, need I say more? 5. Big Oil's Cadillac welfare These days, the price of a barrel routinely hovers around $100. But the five biggest companies—BP, Chevron, ConocoPhillips, ExxonMobil, and Shell, still get their breaks, despite collective record profits of $137 billion last year. Big Oil creates hundreds of thousands of jobs. How many jobs were created by the Zero Stimulus, which the Fool on the Hill #1, managed? 4. A break for shipping your job to China Jeep which was rescued by the Obama bailout is setting up shop in China? Italy? And General Electric which has already sent it imaging manufacturing to China, now is relocating it’s Research & Development, also to China. R & D requires individuals with brains, and in following this generates high paid positions. 3. The behaving like an asshole deduction Yet even in the Democratically controlled Senate, liberals realize that exposing their corporate patrons to more tax liability will go over like a dieting booth at the county fair. Leahy's bill never made it out of committee. Need I say more? Harry & the Budget! 2. Delaware, the Cayman Islands of America How dare you talk down, Fool on the Hill #1's home away from home! 1. The corporate blackmail exemption Does the Village Voice utilize a tax professional in filing it’s Federal, State & NYC filings? Unfortunately, the corporate blackmail exemption nonsense is the calling card of the tax code. Surely even President Failure can see that.
@nickshaxson I like how Robmey wanted to get rid of all "loopholes and exemptions" ex for ones that effect him. Econ goal Rom pays no tax.
Pro-Romney Right Wing Judge Rules for Sheriff Arpaio
Arpaio-style Law in Future for U.S. With Romney appointments.
If Romney is elected, the U.S. can expect more right-wing judicial appointees like the Judge in the following link who is a passionate pro-Arpaio right-wing Judge sitting on the Arizona federal Bench. Talk about right-wing judicial activism, this Judge has violated fundamental judicial ethical cannons in his blind campaign supportive of Arpaio cronies from the bench.
This judge has single-handedly taken the ABA Model Rules of Professional Conduct and ABA Model Code of Judicial Conduct and flushed them down the toilet. A little too much order in this Court reminiscent of 1930s fascist tribunals. The court papers at the link detail a campaign of a judicial home-bred terrorist … more on the way if Romney has a say.
Hold on for a new era of police state terror in the U.S. with Right-Wing judicial appointees.
It must stop look at Iceland if you dare to.That is what will happen here in the near future. Enough of the wall street thugs.
Subsidies for big oil dont even acutally exist. http://www.americanthinker.com/2012/03/big_oil_and_tax_breaks.html Even ethanol got more than oil. In case you didn't know, ethanol is a complete joke. It takes more energy to make a gallon of ethanol than you get from burning ethanol as a fuel.
@nowayman Yes, the fundamental laws of physics continue to hold true... you cannot "create" energy. There will always be inefficiencies, even in the production of ethanol.
I agree that ethanol has some serious downsides, but the fact that its creation process obeys the laws of physics is not one of them.
What I want to know is how did Mitt and Ann Romney manage to get a HUGE tax deduction for dressage horses? A HOBBY of Ann Romney for goodness sake! I never knew horses were an allowable deduction in the tax code. Or, is that in the WEALTHY tax code? Like yachts being deducted as HOMES since they have bedroom, bathroom, and kitchen! The Romneys claim that the reason they refuse to show their tax returns, like everyone else, including his father, has, is because they don't want us people seeing their "charitable contributions"! Tell me. Why on earth would they want to hide that? Unless, their "charity" ALL those millions, one way or another, sooner or later, benefits the Mormon Church. Which all their "charity" is funneled to Salt Lake City, Utah , worldwide headquarters of the Mormon church. There just so happens to be a $4 billion dollar "city improvement project" going on in SLC. SLC was beneficiary of infrastructure improvements for the Winter Olympics that Mitt Romney claims to have "saved". What he fails to mention is that he conned the Federal Government into paying for improvement to the infrastructure in SLC, bringing in bus drivers from out of state, at union wages, etc. He didn't 'save the Winter Olympics, we the taxpayers, thanks to the Fed, saved the Winter Olympics AT OUR EXPENSE! And, improved the city all for the glory of the Mormon church! Where was " Separation of church and state"? as written by Thomas Jefferson. Sickening! And, there's people that are actually voting for this liar, this con-man!
Oh the horror! the outrage!
we can fan the flames and make FedEx and Nordstroms evil,
we can ask the very simple question - why?
But the media doesn't want you to have details - it takes away from the headline.
What's different between FedEx and UPS?
What's different between Nordstroms and Macys?
This article wants you to believe it's because of lobbyists.
But there's no proof. There's no analysis. There's no nothing, except the ignorant outrage of the author.
Do you really believe there is significant difference between Obama and Romney, let alone Bush? They are shills for the banks and wall street with enormous amount of PAC money. All the bankers got paid multi-year bonuses while I struggle to make ends meet. It's Fucked Up
Excellent article, but again I say, the people who invented and still continue to use pagination for interwebs articles will be consigned to a circle of hell lower than any imagined by Dante. SINGLE-PAYER HEALTH CARE and SINGLE-PAGE ARTICLES!!
I agree with you about the article pagination in a way, because I hate having to click to continue reading.. but you have to understand that you would be scrolling for days if some of these long articles were listed on one page. The pages could be wider to display more but then mobile users would have issues. Reasonable sacrifices have to be made.
@mbrachman Right on!
@GTCost http://t.co/Ns0B4Zid @mrs_bopp @RealEddieHobbs
@ireland + no loopholes. Ireland is one mighty loophole for global tax evasion. @mrs_bopp @RealEddieHobbs
@GTCost @ireland @mrs_bopp Not evasion. Avoidance. Remember that the government has been the main supplier of tax avoidance schemes for yrs
@ireland @GTCost @mrs_bopp avoidance. If its legal, its avoidance, if its not, its evasion. mitigation, dodging, structuring, all legal.
@JeremyTaxman I agree. It may be more accurate to describe Eire as a *tax avoidance enabler supreme* ;-) @GTCost @ireland
@GTCost But can it be considered a tax haven if most of the revenue isn't taxed there? @mrs_bopp @RealEddieHobbs
@ireland + Like yourself, I believe in low taxation. But low rate only works when it is enforced and there are + | @mrs_bopp @RealEddieHobbs
@ireland It makes it worse then, because we are just an enabling stage for even more tax evasion. Global scale + | @mrs_bopp @RealEddieHobbs
If thats true,then they will hardly be able to run off, if they have to pay more taxes here. @ireland @mrs_bopp @GTCost @RealEddieHobbs
@JFTAXI Lots of financial companies only here because of loose regulation. @mrs_bopp @GTCost @RealEddieHobbs
IMHO the IFSC is the biggest money laundering scheme in the world, been saying that for years. @mrs_bopp @GTCost @ireland @RealEddieHobbs
@mrs_bopp It is id 2 prob of low-cost regulation - it only works if the rules are vigorously enforced | @ireland @RealEddieHobbs
@mrs_bopp In a reverse way, yes. Mafia bagman collects. Ireland facilitates evasion. | @ireland @RealEddieHobbs
@mrs_bopp @steve_hanke I suspect it also has the fourth - the 'black market' specialist rate for regime cronies.
@AbnormousCheese There is corruption in a 72,000+ page tax code? I am shocked, shocked to hear about it.
@AbnormousCheese That said, given the horrid US rate, I can't blame companies for working to get that reduced. Cut rates & deductions.
@MilitiaJim Make then eligible to serve 2 terms or something on a rotating schedule so there is always someone experienced.
@AbnormousCheese That just shifts the point of corruption from the legislator to the long serving adviser.
@MilitiaJim Politician shouldn't be a career. Draft them for a term from eligible voters like a jury. The lawyers should do the advising.
@AbnormousCheese Politicians are loath to give up power, which is why it shouldn't be given to them in the first place.
@MilitiaJim What we need is individual voting on issues that our reps see and vote according to us. Wont happen because who gives up power?
@MilitiaJim I am not paid to vote though. It really isn't messy, it's entrenched and there is too much money involved to change it.
@MilitiaJim Yes, and it butts up to 1st amendment rights and the stupid money/politics debate. It should rest with voters not lobbyists.
@AbnormousCheese Twitter is substandard venue for this. We need to meet for some beers and proper discussion.
@AbnormousCheese You cannot eliminate those voices. Trying to do so will make you worse than any profiteer.
@AbnormousCheese I abhor political corruption, which increases as the size of the government increases.
@AbnormousCheese http://t.co/rVUp82zp When did "political corruption" enter into profiteering?
@AbnormousCheese I don't think there has been proper profiteering in the US since WWII. Maybe gas spikes? But gov't causes those.
@MilitiaJim Are you for or against weapons manufactures profits (war profiteering which I thought was illegal) used to lobby government?
@MilitiaJim Equitably sharing the responsibility. Maybe if there were more consequences to warring we wouldn't do it so often.
@MilitiaJim When it was 90% and we had to pay back our enormous war debt how much was it? Hmm, sounds familiar...
@AbnormousCheese I too expect things from my gov'ts. Things I'll pay for. Then there is all the other bullshit the gov't do...
@AbnormousCheese Ah. See, I've never considered taxes to be patriotic. Maybe if less gov't $ was devoted to infringing my human rights ...
@MilitiaJim The rich who skirt paying are to me, very very unpatriotic. Lest they forget the country which enabled their wealth.
@AbnormousCheese ... Because they pay thievish cigarette duties because the rich pay such a large share of the income taxes collected?
@MilitiaJim I see it as a duty. I expect things from my govt so I pay my share. I do think that share is unequally leveled against the poor.
@AbnormousCheese Taxes would not be collected without a credible threat of violence, or do you not understand how they work?
@MilitiaJim Gunpoint? Speaking to the guy who vehemently is against gun control of any kind...you're quite a cunt.
@MilitiaJim Fine. Lets get rid of it and those states I referenced before fall apart and people die. Yay!
@AbnormousCheese "Fun" fact: The poverty rate stopped dropping with the implementation of LBJ's "Great Society." Coincidence? Nope.
@AbnormousCheese Compassion? Gov't programs are not compassionate. Compassion is voluntary, gov't is coercive.
@AbnormousCheese I agree that frivolity and subsidies are bad. I disagree on Federal social spending.
@MilitiaJim Nope, that's a trap. Social welfare is a better option than frivolous defense spending and large corp subsidies was my point.
@MilitiaJim Economics dictates that we're enabling this welfare. Cut them loose and people will have to move to favorable states or be poor
@MilitiaJim Wasn't my point. Those shitty states receive more than they pay in. They are welfare states. Cut them loose.
@AbnormousCheese *shrug* VA is going to get more from the Navy than SD. Agriculture shouldn't be paying anyone.
@MilitiaJim Then no money should go from states that have federal surpluses to ones that don't bring in enough http://t.co/0I4EZoxr
@AbnormousCheese Food stamps are a good state/local program. Lousy/unconstitutional federal program.
@MilitiaJim At least that's a conservative conclusion. I still feel helping people is the best course of action though.
@AbnormousCheese Money transfers do not stimulate the economy, but I'll take keeping the $ away from the TSA molesters as a first step.
@MilitiaJim That's why food stamps are the best value for $1 we get 1.73, since it's spent more than once http://t.co/FKd45hka
@MilitiaJim The poor can't invest it, they spend it immediately on goods needed (yes sometime frivolous things too no argument there).
@MilitiaJim I'd rather the poor get money to directly stimulate the economy rather than us wasting it touching our balls at the airport.
@AbnormousCheese Yes: Worthless to counterproductive "aid." And the liberty infringers, their upside is...?
@militiajim Half of those provide aid for our money the other half infringe our rights for the money.
@AbnormousCheese Explain again how those programs, apologies for forgetting ATF and DEA, help poor people. HUD Fucks them good, though.
@MilitiaJim Hah! Start with this crap http://t.co/KxRPCrSv
@AbnormousCheese Cut the rate a lot and cut all the loopholes. Of course we need to cut federal spending by at least 30% too.
@MilitiaJim Cut the loopholes, yes, maybe cut rate a bit, make them pay it. They can't not afford to do business in the US.
@AbnormousCheese It isn't paid because of the corruption in Congress. Cut the rates and the loopholes.
@AbnormousCheese I'm in favor of holding honestly acquired bits. Lobbying gov't for special treatment eliminates the honest part.
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