Retailers enjoy a huge spike in sales over the holiday season, but the money that people spend on products from companies such as Apple isn’t necessarily benefiting the American economy.
It is a subject of great controversy, but it is now clear that companies such as Apple, General Electric, Boeing and Verizon are paying minimal taxes on their earnings in the United States. Charlie Rose of 60 Minutes asked Apple CEO Tim Cook about the issue, and received a very unsatisfactory answer, writes Thom Hartmann for Sputnik.
Tax code allows companies like Apple to hide profits offshore and dodge taxes
Although Cook is technically correct in stating that Apple “pays what it owes,” the real issue is that a number of probes have shown how the company is hiding massive amounts of profit offshore in order to pay less U.S. tax.
According to the Senate Permanent Subcommittee on Investigations, Apple has avoided $9 billion in U.S. taxes. The company would be expected to pay $60 billion in tax if it brought back the $181 billion it holds in offshore profits. The numbers are huge, and it’s not just Apple but the majority of the Fortune 500.
Research by Citizens for Tax Justice and the US Public Interest Research Group Education Fund shows that the 500 largest American companies would owe over $620 billion if they tried to bring home $2.1 trillion in accumulated offshore profits.
Individual taxpayers pay the price for government generosity to corporations
Given that corporations are paying far less tax than before, individual taxpayers are making up the difference. Payroll taxes now provide over 40% of federal revenue, compared to 10% in the 1950s. In contrast General Electric, Boeing, Verizon and 23 other firms paid zero federal income tax from 2008-2012.
The figures are provided by Americans for Tax Fairness and Citizens for Tax Justice, and show that 26 of the most profitable companies on our planet contributed nothing to the U.S. tax base for four years. Another 288 Fortune 500 firms paid just 19.4% tax, around the same as an individual earning $30,000 per year pays on their income.
Of the top 500 corporations, 358 were operating subsidiaries in tax havens at the end of 2014. If an individual taxpayer set up a similar system, they would be sent to jail for tax evasion. But in the case of the corporations, some of them even receive rebates from the government.
Next U.S. President should close tax loopholes
In this way U.S. citizens are not only paying more individual taxes to make up the federal revenue that has been lost as corporations dodge taxes, citizens are in fact subsidizing the same corporations that aren’t paying taxes. The fact is that the U.S. tax code has been consistently funneling wealth from average working individuals to offshore bank accounts held by these companies, their senior executives and large stockholders.
While Tim Cook and Apple are not inherently evil, they are exploiting the U.S. tax code to the detriment of ordinary taxpayers. As Democratic Presidential hopeful Bernie Sanders consistently points out, it is time to close these loopholes and make it much harder for U.S. corporations to dodge taxes.
Fellow Democratic hopeful Hillary Clinton has also spoken out on the issue, claiming that she would use extra money raised from taxes on corporations to pay for a raft of ambitious social programs that would benefit U.S. taxpayers. With more people becoming aware of the fact that individual taxpayers are in effect paying to boost the profits of some of the largest companies in the U.S., there is growing discontent