Stiglitz tells Bill that Apple, Google, GE and a host of other Fortune 500 companies are creating what amounts to “an unlimited IRA for corporations.” The result? Vast amounts of lost revenue for our treasury and the exporting of much-needed jobs to other countries.
“I think we can use our tax system to create a better society, to be an expression of our true values.” Stiglitz says. “But if people don’t think that their tax system is fair, they’re not going to want to contribute. It’s going to be difficult to get them to pay. And, unfortunately, right now, our tax system is neither fair nor efficient.”
In an email to The Huffington Post on Sunday, GE spokesman Seth Martin wrote that the company paid $3.2 billion in cash income taxes worldwide, including in the U.S., in 2012. In addition, he stated, GE paid more than $1 billion in other state, local and federal taxes.
“GE is one of the largest payers of corporate income taxes,” Martin wrote.
Still, GE and other hugely profitable U.S.-based companies like it have come under fire in recent years over their tax practices. Tax breaks given to corporations cost the U.S. government $180 billion per year, according to a recent report from the Government Accountability Office. In addition, companies are likely stashing $1.9 trillion overseas in an aim to avoid paying U.S. taxes on those profits, according to a March analysis by Bloomberg.
GE parks the most profits offshore of any company, Bloomberg found. Many companies including, Apple, Microsoft and Google allegedly employ this strategy of keeping money overseas to avoid paying U.S. taxes on those profits.
The real problem is that GE doesn’t pay its fair share of the US tax burden and, apparently, Apple gets away with a billion dollar tax dodge due to a loop hole in the tax laws. Tim Cooke, Apple’s CEO, appearing before Senate Permanent Subcommittee on Investigations defended funneling billions to off shore tax shelters. What didn’t get mentioned at the hearings were the billions that Apple saved using the “excess stock options” tax break. The loophole allows corporations to deduct compensation that they give to executives in the form of stock options as an expense, the same way they deduct cash compensation. The hitch: stock options don’t hurt the companies bottom line, unlike cash options.
“The only meaningful costs associated with this are that the more stock you issue, the more it dilutes the value of the stock that’s already held by shareholders,” Matthew Gardner the executive director of the Institute on Taxation and Economic Policy told The Huffington Post last month.
Though using the tax break has been rather common practice among technology companies, which tend to issue a higher percentage of their compensation in stock options, it’s becoming more common and lawmakers are slowly starting to take notice, Gardner said.
While the hearing focused on Apple’s offshore holdings, companies have stashed $1.9 trillion in offshore accounts to avoid paying US taxes.
Large U.S. companies boosted their offshore earnings by 15 percent last year to a record $1.9 trillion, avoiding hefty tax bills by keeping the profits abroad, according to a new report.
The overseas earnings stockpile has climbed by 70 percent over the past five years, said research firm Audit Analytics. Data in its report covers the Russell 3000 index of the largest U.S. corporations. [..]
Conglomerate General Electric Co , had the most indefinitely reinvested overseas earnings, at about $108 billion, while drugmaker Pfizer Inc was next with $73 billion, according to Audit Analytics.
Yeah, corporations not paying taxes is the problem.
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