Why is the deficit so big? It could be because billion dollar companies are robbing the U.S. Treasur

[babsbunny]

http://thenewyorkcrank.blogspot.com/2010/10/feeling-poor-want-tax-break-it-could-be.html

Thursday, October 21, 2010
Why is the deficit so big? It could be because billion dollar companies are robbing the U.S. Treasury blind.

One of the reasons you and I and other ordinary American citizens are taxed so much and still live in a country with a huge Federal deficit is because multi-billion dollar American corporations are taxed so little.

They move money around — around Europe and the Caribbean — to make their tax liabilities disappear.

According to Bloomberg news, Google and other U.S. corporations are ripping off the taxpayer to the tune of $60 billion. Now Facebook is about to follow. And there are still others.

[xchrom]

1. what's funny is that a lot of 'little people' - like lots here on DU know that

and yet the IRS and others seem not to.

i wonder if they are going to say they are 'surprised'?

[atreides1]

4. They know

But because the US Congress is mostly bought and paid for, they can do little to rectify the situation.

The laws are so filled with loop holes, that it makes swiss cheese look like a block of cheddar, and the corporations take advantage of these loop holes, while the majority in Congress either do nothing or water down any laws that would force the corporations to pay.

[Exilednight]

5. I think this comes down to resources ..........

The IRS audits individuals because it is much easier to intimidate and physically process all the paperwork of an individual.

On the other hand, you would need an army of IRS agents to audit someone like AIG, or Charles Schwab, or Bank of America. Those companies also have the money and resources to hire an army of lawyers and accountants to fight the IRS.

[unblock]

7. the main thing is that it's perfectly legal, or vastly difficult to prove it's illegal

there are a number of tricks involving laws in different countries, but one of the key concepts is that one corporate entity can sell product to an affiliated entity at a slightly different price (for a fair market profit, but not for an unfair market profit). this means that you can shift profit to low tax countries.

so let's say i have a case of booze worth $1000 from the somewhere in the carribean that i can sell in the u.s. for $3000. if i do so, i make a $2000 profit and have to pay taxes on that.

instead, i sell it first for $2000 to a corporation i set up in ireland, which has a lower tax rate than the u.s.

now i have a $1000 profit in ireland and a $1000 profit in the u.s.




this process can be repeated and pushed to the point where there is virtually no tax at all in the u.s.
this is all perfectly legal provided the profits are "fair market". if the company does it properly, it is extremely difficult for the irs to prove that the profits were not fair market, as they are going up against an army of expensive international tax lawyers with greater access to market data than the irs has.

it's only if the irs gets the whole picture and can prove that the entire scheme was artificial (again, a very difficult thing to prove) that they have a chance to find any corporation guilty of evading taxes.



the thinking of the irs, thanks both to the republican party's priorities and simply to pragmatic bean-counters is that it's more cost-effective to go after the little guy who can't afford to put up a big fight.

[pocoloco]

2. Treason, and it should be punished as such!

[Exilednight]

3. Because we had to give all that money to to-big-to-fail banks so they can become even bigger. n/t

[Sal Minella]

6. But those corporations that are paying a two- or three-percent tax

rate have all those politicians and legislators to support, so it sort of works out.

I wonder if the Corporations can claim the Congresscritters as dependents on their taxes?

[felix_numinous]

8. K & R

[Greyhound]

9. Link to one of the best explanations currently floating through the internet.

http://www.huffingtonpost.com/jeffrey-winters/americas-income-defense-i_b_772723.html

The U.S. tax code is so large, so contradictory, and so mysterious that anyone with the resources can virtually dictate what they will pay. GE's tax return, for example, approaches 10,000 pages every year and is backed up with multiple law firms that exist only to argue and enforce GE's "because we say so" return.