As Burger King heads north for Canada’s lower corporate tax rate, we speak to Rolling Stone contributing editor Tim Dickinson about his new article, “The Biggest Tax Scam Ever.” Dickinson reports on how top U.S. companies are avoiding hundreds of billions of dollars by parking their profits abroad — and still receiving more congressionally approved incentives. Dickinson writes: “Top offenders include giants from high-tech (Microsoft, $76 billion); Big Pharma (Pfizer, $69 billion); Big Oil (ExxonMobil, $47 billion); investment banks (Goldman Sachs, $22 billion); Big Tobacco (Philip Morris, $20 billion); discount retailers (Wal-Mart, $19 billion); fast-food chains (McDonald’s, $16 billion) – even heavy machinery (Caterpillar, $17 billion). General Electric has $110 billion stashed offshore, and enjoys an effective tax rate of 4 percent – 31 points lower than its statutory obligation to the IRS.”
And small business is not benefiting from all these tax games that multinationals are able to play, and they’re having to compete with these companies here.
So, Apple has this amazing deal, where they’ve got essentially a shadow company in Ireland. And it’s incorporated in Ireland, but for Irish purposes, it’s an American company, and for American purposes, it’s an Irish company. And so you end up with this black hole of taxation where in fact this Apple subsidiary files a tax return to no government in the world. And so, it can use all kinds of accounting tricks to funnel money to this company, and they sit there essentially absolutely untaxed. Just there’s no tax return. And so you have billions of dollars sitting there. And again, when Apple needs billions of dollars to fund its American operations, it has bond offerings, and its cost of borrowing here in the United States is incredibly low. Just investors are virtually paying Apple to raise this money, because it’s secured by these massive piles of cash, technically abroad, although they’re actually banked reportedly in Manhattan.
And any international company NOT doing this would be facing shareholder lawsuits over it.