September 5, 2013

Sibling Rivalry: Despite Feud, Right-Wing Biz Groups Share Tax Dodging Goal

By William Rice, Policy Consultant, Americans for Tax Fairness

Tax dodging by big, multinational corporations must have gotten bad when even other American businesses and their political allies start complaining, right? But look past the squabbling and you’ll discover a common desire by conservative business groups to avoid paying a fair share of taxes.

Dan Danner, president of the National Federation of Independent Business (NFIB), recently slammed “mega-corporations that have been gaming the [tax] system for years.” And Rep. Dave Reichert (R-WA), who’s a member of the House Ways and Means Committee (which writes tax bills), announced that President Obama’s proposal “to cut tax rates for big business is simply a non-starter.

The NFIB is not generally in the habit of looking out for working families: It spends a lot of its time opposing health care reform and blocking living wage proposals. Representative Reichert, meanwhile, scored just a 5 out of a possible 100 last year on the definitive Congressional scorecard compiled each year by Americans for Democratic Action (ADA), displaying reflexive opposition to business regulation, worker rights, environmental protection and other progressive ideals.

So what’s going on here? The answer lies in a split in the business world, between the kind of companies that can easily hide profits in overseas tax havens—like tech giants Apple and Microsoft, and Big Pharma’s Pfizer and Merck, which collectively had nearly $270 billion stashed offshore at the end of last year—and those that can’t. Think not only Main Street shops, but also national, brick-and-mortar retailers.

Companies with lots of intellectual property can easily “sell” patents and other ephemeral items at a discount to dummy corporations they set up offshore, then lease them back at exorbitant prices, artificially creating losses in this country and profits in low- or no-tax havens. That kind of shell game is obviously tougher to pull off with a haircut at the local barbershop, a bowl of soup at the corner diner—but also with a set of snow tires from Sears or a bottle of shampoo from CVS.

To pursue their peculiar brand of pro-business, anti-multinational-business tax reform, conservative small businesses and their bigger retail cousins have formed one of the many tax lobbying groups that have popped up around Washington this year: the Coalition for Fair Effective Tax Rates. The clunky name is meant to draw attention to the low effective federal income tax rates that many big multinationals actually pay—notwithstanding the 35 percent statutory tax rate they like to whine about.

So does that make the Coalition for Fair Effective Tax Rates a natural ally of groups like Business for Shared Prosperity, the Main Street Alliance and the American Sustainable Business Council—organizations of small businesses that are pushing for true corporate tax reform? Not at all. Rather than seeking to have all businesses—big and small, domestic and international—pay their fair share, the folks at the Coalition really just want to get in on the low tax rate game for themselves.

So it turns out the conservative business lobby is really one happy, anti-reform family after all.