As Burger King heads north for Canada’s lower corporate tax rate, we speak to Rolling Stone contributing editor Tim Dickinson about his new article, “The Biggest Tax Scam Ever.” Dickinson reports on how top U.S. companies are avoiding hundreds of billions of dollars by parking their profits abroad — and still receiving more congressionally approved incentives. Dickinson writes: “Top offenders include giants from high-tech (Microsoft, $76 billion); Big Pharma (Pfizer, $69 billion); Big Oil (ExxonMobil, $47 billion); investment banks (Goldman Sachs, $22 billion); Big Tobacco (Philip Morris, $20 billion); discount retailers (Wal-Mart, $19 billion); fast-food chains (McDonald’s, $16 billion) – even heavy machinery (Caterpillar, $17 billion). General Electric has $110 billion stashed offshore, and enjoys an effective tax rate of 4 percent – 31 points lower than its statutory obligation to the IRS.”
This is a rush transcript. Copy may not be in its final form.
AMY GOODMAN: Well, some are calling for a boycott of Burger King because of the merger. Democratic Senator Sherrod Brown of Ohio issued a statement that, quote, “Burger King’s decision to abandon the United States means consumers should turn to Wendy’s Old Fashioned Hamburgers or White Castle sliders. … Burger King has always said ‘Have it Your Way.’ Well, my way is to support two Ohio companies that haven’t abandoned their country or customers,” the senator said. Both Wendy’s and White Castle are based in Ohio. Brown also called for the creation of a global minimum tax to eliminate incentives for companies to move. And I would like Tim Dickinson to comment on this. Tim Dickinson has written extensively about these kinds of deals and others for Rolling Stone, where he’s a contributing editor. Talk about this and then what you call the “biggest tax scam ever,” Tim.
TIM DICKINSON: Well, so the inversion trend is just the tip of a very destructive iceberg that’s seen the hollowing out of our corporate tax base. And so, the inversions, you know, is just basically a legal scam that lets a company technically offshore itself for a lower tax rate. And it goes sort of hat in hand with companies shipping massive quantities of corporate profits overseas through sort of elaborate accounting schemes. And while it’s overseas, it sits there tax-free, accumulates tax-free kind of like a 401(k) does. And so, right now there’s about $2 trillion in corporate profits that are stockpiled overseas, on which the U.S. government is technically owed something like half a trillion dollars. So, at the same time that we’re cutting food stamps, that we’re cutting home heating aid to the elderly, you know, there’s literally a jackpot of half a trillion dollars that politicians on both sides of the aisle just won’t go after, because there’s just an imbalance of power there. The corporate power has grown much greater than state power in this case.
JUAN GONZÁLEZ: And, Tim Dickinson, one thing that many of these companies that are parking their profits overseas keep quietly lobbying for is amnesty, right? They want a tax amnesty, where the government would lower their taxes temporarily, so they could bring this money back. Could you talk about that and who in Congress champions that?
TIM DICKINSON: Well, I mean, it’s like a bailout, basically. It’s a bailout on the tax bill. And this was done in the Bush administration in 2004. The nominal U.S. tax rate, nobody really pays it, but the nominal rate is 35 percent. And in the Bush era, corporations were allowed to bring their money home at a rate of five-and-a-quarter percent, 5.25 percent, so basically 30 points shaved off of the tax rate. And so, politicians in both parties really kind of are attracted to this idea. There are few folks who have raised enough of a stink about it that it hasn’t happened. But both really—literally, both sides of the aisle—most recently, Harry Reid and Rand Paul were shopping a bill that would allow corporations to bring cash home at a low rate of 9.5 percent; Dave Camp, the chief tax writer in the House, Republican side, as low as 3.25 percent, I believe; and then on the Senate side, Ron Wyden’s bill would again allow a 5.25 percent tax holiday, is what the jargon is.
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