Why The Mega Banks and Multinational Corporations Are Destroying America

From Washingtonsblog.com

The following excellent pieces explain and give links to why these corporations don't pay taxes and are destroying our country.

Why You Pay Too Much In Taxes: Because Everyone from the Ultra-Rich to Illegal Immigrants Pay Nothing … Or Get Tax Refunds

Posted on July 23, 2012 by WashingtonsBlog

Illegal Aliens Scam Tax Refunds

For years, American taxpayers have been shelling out $4.2 billion dollars per year to pay for a scam.

A report by the Inspector General found that some 2 million illegal immigrants have been receiving large tax refunds by pretending that numerous dependents live with them … when, in fact, most of the dependents live in Mexico and have never lived in the United States.

Once whistleblowers called attention to this problem, their IRS bosses told them to ignore the fraud and look the other way.

WND notes:

The problem was not a revelation to the Northern California IRS field-office worker who viewed the report: “The fraud has been going on for years,” he told WND. “Business as usual.”

“As the video indicates the Service does nothing,” he said, asking WND not use his name to avoid reprisal.

(The Federal Reserve has been bailing out foreign banks for years; but we assume that this is not a backdoor bailout for foreign nationals.)

Giant Corporations Scam Tax Refunds

Pulitzer prize winning reporter David Cay Johnston reports that – in 16 states – giant companies pocket your “state income taxes”.

This includes foreign corporations.

Workers are never informed that their “state income taxes” are being pocketed.   And states often refuse to make this information public, claiming that it is “proprietary information”.

In addition, big companies use a variety of international scams to avoid taxes:

The Washington Post notes:

About two-thirds of corporations operating in the United States did not pay taxes annually from 1998 to 2005, according to a new report scheduled to be made public today from the U.S. Government Accountability Office…

In 2005, about 28 percent of large corporations paid no taxes…

Dorgan and Sen. Carl M. Levin (D-Mich.) requested the report out of concern that some corporations were using “transfer pricing” to reduce their tax bills. The practice allows multi-national companies to transfer goods and assets between internal divisions so they can record income in a jurisdiction with low tax rates…

[Senator] Levin said: “This report makes clear that too many corporations are using tax trickery to send their profits overseas and avoid paying their fair share in the United States.”

Indeed, as … Johnston documents, American multinationals pay much less in taxes than they should because they use a widespread variety of tax-avoidance scams and schemes, including:

• Selling valuable assets of the American companies to foreign subsidiaries based in tax havens for next to nothing, so that those valuable assets can be taxed at much lower foreign rates

• Pretending that costs were spent in the United States, so that the companies can count them as costs or deductions in the U.S. and pay less taxes to the American government

• Booking profits as if they occurred in the subsidiary’s tax haven countries, so that taxes paid on profits are at the much lower safe haven rate

• Working out sweetheart deals with certain foreign governments, so that the companies can pretend they paid more in foreign taxes than they actually did, to obtain higher U.S. tax credits than are warranted

• Pretending they are headquartered in tax havens like Bermuda, the Cayman Islands or Panama, so that they can enjoy all of the benefits of actually being based in America (including the use of American law and the court system, listing on the Dow, etc.), with the tax benefits associated with having a principal address in a sunny tax haven.

• And myriad other scams

Indeed, some of the world’s biggest companies not only dodge all taxes, they actually enjoy a negative tax rate … where they are paid money by the U.S. government, just like the illegal immigrants discussed above.

The World’s Richest Hide $31 Trillion Dollars to Avoid Taxes

A new report from the former chief economist at the prestigious McKinsey firm – an expert on tax havens – concludes that

The Guardian notes:

A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore – as much as the American and Japanese GDPs put together ….

James Henry, former chief economist at consultancy McKinsey and an expert on tax havens, has compiled the most detailed estimates yet of the size of the offshore economy in a new report, The Price of Offshore Revisited, released exclusively to the Observer.

He shows that at least £13tn – perhaps up to £20tn [i.e. $31 trillion dollars] – has leaked out of scores of countries into secretive jurisdictions such as Switzerland and the Cayman Islands with the help of private banks, which vie to attract the assets of so-called high net-worth individuals. Their wealth is, as Henry puts it, “protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy”.

***

The detailed analysis in the report, compiled using data from a range of sources, including the Bank of International Settlements and the International Monetary Fund, suggests that for many developing countries the cumulative value of the capital that has flowed out of their economies since the 1970s would be more than enough to pay off their debts to the rest of the world.

***

“The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments,” the report says.

The sheer size of the cash pile sitting out of reach of tax authorities is so great that it suggests standard measures of inequality radically underestimate the true gap between rich and poor. According to Henry’s calculations, £6.3tn of assets is owned by only 92,000 people, or 0.001% of the world’s population – a tiny class of the mega-rich who have more in common with each other than those at the bottom of the income scale in their own societies.

“These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people,” said John Christensen of the Tax Justice Network. “People on the street have no illusions about how unfair the situation has become.” [Remember that rampant inequality destroys economies.  And conservatives or liberals are both offended by it.]

Al Jazeera reports:

Rich individuals and their families have as much as $32 trillion of hidden financial assets in offshore tax havens, representing up to $280bn in lost income tax revenues, according to research published on Sunday.

The study estimating the extent of global private financial wealth held in offshore accounts – excluding non-financial assets such as real estate, gold, yachts and racehorses – puts the sum at between $21 and $32 trillion.

***

John Christensen of the Tax Justice Network told Al Jazeera that he was shocked by “the sheer scale of the figures”.

“What’s shocking is that some of the world’s biggest banks are up to their eyeballs in helping their clients evade taxes and shift their wealth offshore,” said Christensen.

“We’re talking about very big, well-known brands – HSBC, Citigroup, Bank of America, UBS, Credit Suisse – some of the world’s biggest banks are involved… and they do it knowing fully well that their clients, more often than not, are evading and avoiding taxes.”

Much of this activity, Christensen added, was illegal.

***

The research estimates that since the 1970s, the richest citizens of these 139 countries had amassed $7.3 to $9.3 trillion of “unrecorded offshore wealth” by 2010.

Private wealth held offshore represents “a huge black hole in the world economy,” Henry said in a statement.

Either Eliminate Taxes – Or Tax Fairly – But Don’t Allow Fraud to Rob the Middle Class Blind

Some say that we could eliminate all taxes if we take away from the big banks the monopoly power to create credit, so that the government doesn’t have to pay trillions on interest for that credit.

Some say that income taxes are illegal, because they were never ratified by the states.

Some say that – since more than half of all government discretionary spending goes to imperial wars of adventure and most of the rest is thrown at the big banks so they can keep ripping us off – paying taxes is just propping up a destructive system.

Others – including some leading conservatives – say that the problem is that the wealthiest haven’t been forced to pay their fair share of taxes.

We’re not weighing in one way or the other.  But one thing is for sure: either no one should pay taxes, or we should all – illegal immigrants, giant corporations and the super-rich – be subject to the same rules and pay our fair share.

Soaking the middle class is unfair, unjust … and unAmerican.   Indeed, while the Boston Tea Party was a revolt against taxation without representation, it largely centered on the British government’s disproportionate tax breaks – towards the East India Company, the giant company which dominated the tea market and hurt small American business.

(http://eye-on-washington.blogspot.com)