Bill Knight column for Mon., Tues. or Wed., June 30, July 1 or 2
In early June, business lobbyists were pressuring Congress for a “tax holiday” to let them “repatriate” billions of dollars of profits earned overseas and untaxed. The move would let U.S. companies “return” the money to this country at a tax rate of about 5 percent instead of the 35 percent “marginal” rate (before deductions).
U.S. corporations have offshore profits of more than $2 trillion, according to the research firm Audit Analytics. Tax havens permit them to escape their share of the nation’s tax obligations. Leading the group of corporations with money off-shored in foreign accounts are Apple (with $54.4 billion), General Electric ($110 billion) and Microsoft ($76.4 billion).
Recently, U.S.-based Medtronic announced its intention to buy the Ireland-based Covidien for $43 billion and move its “principal offices” to Dublin to avoid U.S. taxes.
“These transactions are about tax avoidance,” said U.S. Sen. Carl Levin (D-Mich.). “Corporations [are] shifting their tax burden onto their competitors and average Americans.”
A previous, one-time tax holiday passed by signed by President Bush in 2004 didn’t work, opponents say. Drug companies benefited while many corporations repurchased their own stock. A second “one-time” effort was defeated in the Senate in 2009.
U.S.-chartered corporations enjoy incentives and bailouts, publicly-financed research and other privileges, and still resist contributing to society’s expenses, from the infrastructure that companies use to the subsidies they demand.
Some policymakers say rather than rewarding tax avoidance, outsourcing, etc., government should reward responsible business practices that recognize corporations’ responsibilities to employees, customers and, yes, the country, as much as shareholders.
U.S. Rep. Jan Schakowsky (D-Evanston) and 12 co-sponsors introduced the Patriot Corporations of America Act in 2006, when on the same day it was referred to committee and died. Based on research by Monmouth College political science lecturer Robin Johnson and former State Rep. Bill Edley, the bill would have given preferential treatment in government contracts and a 5-percent tax cut to corporations that produce at least 90 percent of their goods and services in the United States; comply with federal regulations on labor relations, consumer protection, and the environment; contribute a minimum of 5 percent to a portable pension plan; remain neutral in worker organizing drives; and refrain from price-gouging customers.
Such incentives would have been paid for by closing corporate off-shoring loopholes and trimming some tax breaks for millionaires.
“The bottom line is, we’re saying that we’re going to target the tax incentives for corporations to companies that care as much about the American worker as they do about the American market,” Edley said “It’s fine if they want to move to Mexico. But why are we providing the tax incentives for them to do it?”
That’s a reference to Maytag, which in 2004 moved 1,600 Galesburg jobs to Reynosa, Mexico, to make its profitable operation even more profitable, despite the cost to everyday Americans – who buy about 90 percent of the corporation’s products.
Schakowky said, “Our government continues to provide carrots – and no sticks – to companies harming our economy. We must stop rewarding outsourcers and tax dodgers, and start rewarding companies that care about America and American workers.”
Indeed, the Center for Study of Responsive Law has surveyed corporate executives about whether they pledge allegiance to the flag and its reference to “liberty and justice for all,” but few responded.
Where is the U.S. Chamber of Commerce in promoting business loyalty to the nation?
Where is the American Legion, which claims to advocate for Americanism?
Consumer advocate Ralph Nader has written about corporations and American ideals.
“It is our country that chartered them into existence and helped ensure their success and survival,” Nader said. “And these corporations now wield immense power in our elections, in our economy, over our military and foreign policies, and even in how we spend time with our friends and families.
“The 4th of July is an ideal time to call out these runaway corporate giants who exploit the patriotic sensibilities of Americans for profit,” he continued, “but decline to be held to any patriotic expectations or standards of their own.”
Schakowsky added, “Patriot Corporations are an expression of the American spirit of our forefathers and -mothers when they took that brave step of declaring our independence and creating the United States of America.”
[PICTURED: "Corporate States of America" flag graphic from teamsters355.com]