Offshore Tax Shelters

The further I read this article the more I seethed. Now being from Detroit, I'm one of the first to defend the Big 3, and I was also critical of our government when they made them jump through hoops for a mere "loan". It troubles me that they are mentioned in this article along with some others that were just handed our tax dollars with no strings attached.

Below is an article by Ron Dzwonkowski of The Free Press, I hope you enjoy it:


RON DZWONKOWSKI
Offshore tax shelters much too inviting
American companies, especially those receiving federal aid, should be expected to pay a fair share of U.S. taxes
BY RON DZWONKOWSKI • FREE PRESS COLUMNIST • January 25, 2009

http://www.freep.com/apps/pbcs.dll/article?AID=/20090125/COL32/901250358

Pretty well buried under all the hoopla of President Barack Obama's inaugural was a report last week that could help the U.S. Treasury tame its way-out-of-whack balance sheet. The Government Accountability Office report looked at U.S. companies that stash money in foreign countries to shelter them from U.S. taxes.

U.S. Sen. Carl Levin, D-Mich., who requested the report along with fellow Democratic Sen. Byron Dorgan of North Dakota, estimates that such companies are avoiding $100 billion in U.S. taxes. And many of them -- including Bank of America and Citigroup -- have lately been on the receiving end of billions of dollars in federal bailout money or fat federal government contracts.
Now, $100 billion may seem like pocket change when you're running a trillion-dollar budget deficit and carrying a $10.4-trillion national debt. But you know, every billion counts when you are trying to spend your way out of a recession. Unfortunately, this offshoring of taxable assets is entirely legal, which Levin and Dorgan hope to do something about.
Common sense, not to mention common decency, would seem to dictate that if you take tax dollars you also pay your full share of tax bills.
According to the report by the GAO, which is the congressional watchdog agency on government programs and spending, 83 of the 100 largest publicly traded U.S. corporations and 63 of the 100 largest publicly traded companies with government contracts have subsidiaries in places that are regarded as tax havens. There is no official definition of such places, but they have common characteristics, such as no or low local taxes, political stability, laws that keep financial dealings secret, and a tendency to promote themselves in the right circles as great places to keep your money out of reach of Uncle Sam or other tax-grabbing governments.
Bermuda, for example, has no income tax on foreign earnings and allows foreign companies to incorporate there under an "exempt" status. Plus the island is not a bad place to have to go to visit your money. The British Virgin Islands, the Cayman Islands, Switzerland and Luxembourg are among other places that attract extraordinary amounts of foreign corporate capital. None of the countries identified in the GAO report as tax havens appears to have much in the way of a military or other things that take a lot of tax dollars. When they have emergencies, they probably just call us.
To be fair, the GAO report says some companies have legitimate business reasons to operate in places that also happen to have favorable tax and privacy laws.
But does insurance giant AIG, for example, recipient of $85 billion in federal bailout money, really need five subsidiaries in Bermuda and three in Switzerland, as listed in the GAO report? Does Boeing need six in Bermuda and 16 in the U.S. Virgin Islands? The report shows Midland-based Dow Chemical with 35 subsidiary operations in countries identified as tax havens, Ford with two, General Motors with 11, and GMAC -- in which the U.S. Treasury now has a $5-billion stake -- with two, one in Bermuda and the other in Switzerland. How many car loans can you make in such places?
There are those who will say that if the United States had more reasonable tax laws, Uncle Sam wouldn't be driving all this money into offshore shelters. But there are those, too, who will say that no business will pass up an opportunity to cut its own taxes.
Back in 2007, when Levin first started raising this issue through the permanent subcommittee on investigations that he chairs, he had an ally in the Senate behind legislation to at least make the companies disclose their financial offshoring, which could have had an impact on their ability to secure federal help. Levin's bill was cosponsored by the junior senator from Illinois, a Democrat named Barack Obama.
So something tells me that while the GAO report didn't make much of a splash, it will not be the last word on this issue.
RON DZWONKOWSKI is associate editor of the Free Press. Contact him at dzwonk@freepress.com or 313-222-6635.



Does this bother you as much as it bothers me? I can understand a single company in a tax sheltered local but when the parent company has several, it says to me they are hiding. I truly hope that some of the "change" that the Obama Administration touted during the election is demonstrated by reacting to this issue in a manner that benefits the citizens of this country. We can only hope. JMHO

bae