Tuesday, April 19, 2005

If we don't get our deficit under control, the economic consequences could be devastating. If foreign investors decide we're not financially responsible enough and stop investing here, the bottom could fall right out of our economy. Oddly enough, though, there's a solution to the deficit quandary--or there would be if the Bush administration weren't a wholly owned subsidiary of corporate America--and that would be to get corporations to stop their tax cheating. We could bring in an additional $312 billion to $353 billion a year. An American Prospect column by Robert Kuttner points out that:
Much of [the big tax cheating] is in the form of very complex tax shelters, deliberately designed to make the tax evasion techniques so complicated that auditors have trouble figuring out what's legal and what isn't. Much of the rest happens overseas, where affiliates of U.S. corporations arrange to book their profits in tax havens with which the United States has no enforcement treaty.
Last fall, Citizens for Tax Justice examined federal taxes paid by 275 of America's largest corporations. On average, they paid a rate of 17.3 percent -- lower than the rate paid by nearly everyone who is reading this column. The statutory corporate rate is 35 percent.

Clinton was taking steps to make corporate tax evasion more difficult, but then Bush arrived . . . .
[The Bush] administration, in its first weeks in office, sidetracked an agreement negotiated by the Clinton administration that would have produced greater tax collaboration among nations. The agreement would have required the reporting of financial transactions with nations used as tax havens.
But this sort of international enforcement is strenuously resisted by America's blue chip trade associations, corporate lobbyists, and their political allies. ''This is a crime wave," says McIntyre of Citizens for Tax Justice, ''facilitated by the most prestigious accounting firms and law firms, with ordinary taxpayers footing the bill."
The Bush administration is willing to invade privacy when the purpose is thwarting terrorists but abets criminals when the purpose is corporate tax evasion. As the folk song ''Pretty Boy Floyd" put it, ''Some will rob you with a six-gun, some with a fountain pen."

Kuttner's column is not long in case you care to read it.

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