October 8, 2013

Tuesday Tax Tradeoff: Basic Services for Native Americans OR Corporate Accounting Tricks

By William Rice, Policy Consultant, Americans for Tax Fairness

ATF Native American TradeoffNative Americans have suffered more than most from the federal government shutdown, seeing services threatened from foster care to food assistance. And these cuts come on top of existing service reductions mandated by the across-the-board budget cuts known as the “sequester.”

Our nation has a moral and legal obligation towards its Native American population that includes maintaining basic public services – like health care and education. It has no obligation to allow corporations to dodge their taxes with accounting tricks. Yet Congress has cut these important services in Indian Country, while letting big corporations avoid taxes with bookkeeping sleights-of-hand.

The budget “sequester” has taken a particularly heavy toll on Native American communities, diminishing housing assistance, substance abuse prevention, education funding and other needed assistance. Currently, 28 percent of Native Americans live in poverty and more than a third lack health insurance (pp. 3 and 5). For many Native Americans, these budget cuts only make a desperate situation worse. 2013 Budget Cut: $503 million.

Corporations can artificially lower their taxes by reporting a loss if the market value of their inventory goes down. Yet they don’t have to report a taxable gain if the market value goes up, under the “lower-of-cost-or-market” (LCM) rule. This “heads I win, tails you lose” loophole (p. 131) is just one of many tricks accountants play to shield corporations from paying their fair share of taxes. It should be eliminated. Annual Tax Break: $485 million (Sec. VIII, Item C).

It’s time Congress got its priorities straight. Let’s fulfill our obligations to Native Americans and demand that corporations fulfill their tax obligations to all of us.