Treasury: Congress must halt foreign tax inversions

You recall I've written about tax inversions recently; they're a crock and they're un-American. Here's Treasury Secretary Jacob Lew's take on what Congress should do to stop this flood of inversions [emphasis mine]:

To make sure the merged company is not merely masquerading as a non-U.S. company, shareholders of the foreign company would have to own at least 50 percent of the newly merged company — the current legal standard requires only 20 percent. This approach is based on a bipartisan law enacted in 2004 and could serve as a basis for a bipartisan solution again. Right now, leaders in Congress have put forward strong legislation that adopts elements of this plan.

For legislation to be effective, it must be retroactive. Current proposals in Congress would apply to any inversion deal after early May of this year. The alternative — legislation taking effect after the president signs it into law — could have the perverse effect of encouraging corporations to act more quickly, negotiate new deals and rush to close those transactions before the bill is enacted. 

And here's Lew's conclusion:

Our tax system should not reward U.S. companies for giving up their U.S. citizenship, and unless we tackle this problem, these transactions will continue. Closing the inversion loophole is no substitute for comprehensive business tax reform, but it is a necessary step down the path toward a fair and more efficient tax system, and a step that needs to be in a place for tax reform to work.

Now it's time for Congress to act.

Close the tax loophole on inversions

By Jacob J. Lew

July 27, 2014 | Washington Post

URL: http://wapo.st/1Anutu4

UK gov't. wakes up and smells Starbucks' tax dodge

Imagine!  After Reuters published an investigative report in October on how Starbucks paid no corporate tax in Britain, the company has been summoned to testify before the House of Commons public accounts committee!

Now, this may be partly because it's a U.S. company, so it's easy for Brits to pick on Starbucks.  On the other hand, other big "American" MNCs such as Amazon, eBay, Facebook and Google pay little or no corporation tax despite large British operations.  So probably Starbucks has been targeted because everybody can see how many Starbucks cafes there are and how much business they do, and it's absurd on its face to suppose that Starbucks is not a profitable operation in the UK.  The issue is now political.  As it should be.

If only the U.S. would follow suit, and at least shame such companies as G.E., Boeing, Verizon and Mattel that pay no corporate tax.  If only.

And if only we had a group like "UK Uncut" that protested such tax avoiders as Starbucks, highlighting how many social services could be funded if only the company paid its fair share of tax.  

And before you can say the U.S. statutory corporate tax rate is too high, let me remind you that, thanks to legal loopholes and overseas tax avoidance schemes, U.S. corporate tax receipts as a share of profits were "at their lowest level in at least 40 years" in fiscal year 2011, according to WSJ.

Starbucks wakes up and smells the stench of tax avoidance controversy

Cafe chain executive to face questions from MPs, while protesters plan to turn branches into creches and refuges.

By Simon Neville and Shiv Malik

November 12, 2012 | Guardian

URL: http://gu.com/p/3bmkn

The REAL corporate tax rate

Facts don't matter.  Gotta cut that corporate tax rate.  Gotta do it.  Our nation's competitiveness is at stake....

10 Most Profitable U.S. Corporations Paid Average Tax Rate Of Just 9 Percent Last Year

By Alexaner Eichler

August 6, 2012 | Huffington Post

URL: http://huff.to/RQ2lGV

DC Johnston: U.S. companies hold $5.1 trillion in cash

My man David Cay Johnston is on the case:

The Fed's latest Flow of Funds report showed that U.S. nonfinancial companies held $1.7 trillion in liquid assets at the end of March. But newly released IRS figures show that in 2009 these companies held $4.8 trillion in liquid assets, which equals $5.1 trillion in today's dollars, triple the Fed figure.

Yeah, it's all because of uncertainty over Obamacare.  Yeah, that's the ticket.  We still need to cut the corporate tax rate!

Seriously though, we need to close overseas tax loopholes.

Idle corporate cash piles up

By David Cay Johnston

July 16, 2012 | Reuters

URL:  http://blogs.reuters.com/david-cay-johnston/2012/07/16/idle-corporate-cash-piles-up/

U.S. firms use loopholes to MAKE money on corp. taxes

Here's your daily dose of 99-percenter class rage:

In a recent report by the Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy, 26 of 30 Fortune 500 companies examined had negative income tax rates on profits made in the U.S. between 2008 and 2011 (h/t Think Progress).

And about that "non-competitive" and "punitive" 35 percent corporate tax rate that poor little U.S. firms must pay?

... the actual tax rate corporations pay, called the "effective" tax rate, is at 12.1 percent of profits, the lowest level it's been since 1972, Think Progress reports.  Likewise, tax revenue as a percentage of gross domestic product is at lows not seen since the 1940s, according to CTJ.

Meanwhile, the GOP's House budget guy Paul Ryan wants to lower the corporate tax rate to 25 percent and close unspecified "special interest loopholes" later.  Probably much later.  As in next century.  (Does anybody believe he'll do it?  Not with our pay-to-play Congress.  Throw them a bit of campaign cash and they'll give you a huge ROI for your lobbying dollars via the IRS.)

Corporate Tax Rates: Fortune 500 Companies That Make Money From Taxes

By Harry Bradford

April 9, 2012 | Huffington Post 

URL:  http://www.huffingtonpost.com/2012/04/09/corporate-tax-rates_n_1413268.html