Star-Ledger Guest Columnist Linda Stamato wrote: “The progressive group, Americans for Tax Fairness, produced a list of the top 10 corporations that take full advantage of the tax codes — written to provide loopholes for them — and among them are several corporations in New Jersey. In fact, four New Jersey companies make their top 10 list of corporate tax dodgers: Honeywell, Merck, Pfizer and Verizon.”
What does it take to be able to game the system in order to reduce tax liability? For starters, heavy corporate influence, a slew of lobbyists and creative accounting. And, a Congress that refuses to reform the tax code.
And as corporations engage in efforts to dodge while the rest of us, those who are not in positions of influence or are unable to take advantage of the bent rules, including small businesses, pay taxes to support, among other things, the operation of the government that defends the nation, guarantees the rule of law, and provides funding for education, welfare and critical social needs.
America’s tax policies lets corporations skirt their civic obligations, leaving us with a bigger tax bill to maintain society.
The progressive group, Americans for Tax Fairness, produced a list of the top 10 corporations that take full advantage of the tax codes — written to provide loopholes for them — and among them are several corporations in New Jersey.
While Johnson & Johnson avoided placement among those 10, it parked significant dollars abroad. Along with Pfizer and Merck, Johnson & Johnson has been moving ownership of patents and trademarks to subsidiaries in low- or no-tax countries to avoid tax payments.
Others vie for tax-dodger status, among them Apple, Exxon, Caterpillar, Google, FedEx, AT&T, Chevron, and IBM. From 2008 and 2013, General Electric and Boeing joined Verizon in amassing more than $102 billion in combined profits as they received over $4.1 billion in income tax rebates from the IRS.
Readers who see tax evasion or avoidance (if you prefer) as compliance with rules, and see the 35 percent corporate tax as high relative to that of other countries and therefore providing justification for avoiding paying it, should know that few corporations do pay that rate, not even close to it. (The average on foreign income is about 16 percent but, yes, still a good deal higher than rates in Ireland and the U.K.)
Again, Congress refuses to reform the tax code to address the issues that many of us, including several readers, have raised and continue to raise.
The emergence of the Panama Papers, which is informing the public about the “politicians, criminals and rogue industry that hides their cash,” and the serendipitous surfacing of revised rules issued by the U.S.Treasury and the I.R.S. in recent weeks regarding inversions and other tax evasion schemes, converged as tax day arrived, serving to highlight the egregious conduct of individuals and corporations with respect to tax avoidance.
But, few did as thorough and solid a job analyzing the current scene than Nick Kristof did in his opinion column in the New York Times this week, “The Real Welfare Cheats.” I recommend it. Among other observations, are these:
- “For each dollar America’s 50 biggest companies paid in federal taxes between 2008 and 2014, they received $27 back in federal loans, loan guarantees and bailouts.”
- “Each dollar the biggest companies spent on lobbying was associated with $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts.”
- “Among the 500 corporations in the S&P 500-stock index, 27 were both profitable in 2015 and paid no net income tax globally (my italics).”
- “It’s now widely recognized that corporations have manipulated the tax code. The U.S. Treasury, the World Bank, the International Monetary Fund, the European Union, and professional economic journalists are all trying to respond to issues of tax evasion.”
As for the United States, and the State of New Jersey, I repeat:
The nation’s tax system is in vital need of reform. Such reform would include a simplification of the tax code, a broadening of the tax base through the elimination of many if not all tax deductions (which, in sum, favor the rich), and a decrease in the favored treatment of income from capital as opposed to wage earnings (see above). Closing the tax loophole that treats a large portion of private equity and hedge fund managers’ income — curiously called “carried interest” — and taxing it at regular salary rates is essential.
So, until such time as Congress begins to do its job, we need to do all we can to shame the corporations who game the system, to chastise the lawmakers who do their bidding, and through executive orders and actions by regulatory bodies, and state initiatives, do what we can to rein in those who willfully avoid the requirements of citizenship.