There are numerous multinational companies that are not paying their taxes in the US, to the tune of over $700 Billion (yes, that's a B). Deferral is a lovely (to corporations and multinational companies) little tax dodge that allows these companies to not pay their US taxes until they "bring the money home." In the meantime, these same companies/corporations are heavily lobbying Congress for lower taxes. (PS the 35% tax rate is not quite 35%, it's 35% MINUS the taxes paid to other countries)
There are all kinds of schemes employed by multinational corporations, often involving using foreign subsidiaries that sell to their parent company at high prices. For example, Apple has transferred “intellectual property” (IP) – various patents and copyrights, the “crown jewels” of the company – to a subsidiary in Ireland. When Apple sells products in the U.S. they claim that much of the “cost” of making them is licensing this IP, which means the profit is made by the Irish subsidiary and not the U.S. parent. Pfizer and many, many others use similar schemes to make it look like their U.S. profits are made by foreign subsidiaries. Other companies move jobs, factories, call centers, etc. This puts honest companies that make things here and pay their taxes at a competitive disadvantage.
For a "quick fix" these companies are lobbying for another "tax holiday," saying they will bring the moneies back to create jobs if they don't have to pay their back taxes. How'd that work out in 2004? Let's see:
Overall, corporations used 92 percent of the money they brought back under that tax holiday to enrich their executives and buy back their own shares, not to invest in job creation.
Even mighty Bill Clinton is calling for a tax holiday so that these companies/corporations can "invest in infrastructure" -- private investments as opposed to paying the taxes that are owed.
Some of the top companies/corporations that are screwing the US are:
- Apple
- Pfizer
- GE (they generally have a negative tax rate)
- Verizon
- Caterpillar
There are many others that are ripping us off.
Thing is, if these companies/corporations did not have this deferral scheme to play, we wouldn't need to discuss tax holidays so these same companies would invest in other private companies to rebuild our infrastructure. Nor would we be talking about cutting social security and medicare. Our public schools would be funded. If only these companies paid their darn taxes.
How do we get our lawmakers to end the deferral schemes and get these companies/corporations to actually pay their taxes?
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The Deferral Scheme
Thank you for this excellent summary of a very important issue.
If you happen to be a