Corporate tax cheats bring home the stash
reports on how corporations like Apple are already reaping billions from Trump's tax bill--and falsely claiming that they're going to pass it on to workers.
WHEN THE Republicans passed their long-awaited tax-heist bill in December, there was outrage from working-class people across the country at a law that will transfer obscene amounts of wealth to the pockets of the corporate elite, decimate the public treasury, and put wind in the sails of vultures like Paul Ryan, whose lifelong dream has been to eviscerate the remains of the country's social safety net.
Now, in the immediate aftermath of the bill's passage, many of Corporate America's most notorious tax cheats and profiteers are trying to use their windfalls to give the vastly unpopular law a boost in the public eye, polish their own tarnished images and lend credence to one of the core dogmas of neoliberalism: that what's good for the corporate ruling class is somehow good for the rest of us.
Along with slashing the corporate tax rate to 21 percent, the Trump tax law makes a number of significant changes to the way in which corporate profits are taxed internationally.
Among these changes is a provision that allows corporations to bring back money that they've stashed overseas in tax havens by making a one-time tax payment at the hugely discounted rates of 15.5 percent or 8 percent, depending on the type of investment.
With great fanfare, Apple announced that it would repatriate the $252 billion it had hidden away tax-free for years overseas, making a one-time tax payment of $38 billion, less than half of what they should have paid under the former corporate tax rate of 35 percent.
At the same time, the company reported that it plans to invest $350 billion in the U.S. economy, and create 20,000 new jobs over the next five years, with the implication that this was all made possible due to savings under the tax bill.
This is a highly misleading figure. By Apple's own admission, the bulk of the money includes not only their massively discounted $38 billion tax payment, but also at least $275 billion in payments to "domestic suppliers and manufacturers" that would have happened anyway without the passage of the tax bill.
When you factor in expenses toward the multiple new Apple facilities that were already in the works across the country, and the jobs that will inevitably come with these expansions, you begin to see how Apple's announcement amounts to little more than a well-timed publicity stunt.
At the end of the day, Apple is receiving as much as $50 billion in tax subsidies, courtesy of Trump and his Republican allies.
BUT THAT reality hasn't prevented Apple and other companies' announcements in the wake of the tax law from being used as political fodder by Trump. A number of companies, including Walmart, Comcast and AT&T, have announced that they will be handing out employee bonuses, raises, stock options and other benefits, thanks to their tax windfalls.
There are a few conclusions that can be drawn from these announcements. It's a good thing that these companies, many of whom routinely defraud and abuse their own workers, are rewarding those who make their profit possible on at least somewhat better terms.
But did it all happen thanks to their savings under the tax law? And should these announcements be used to provide vindication for Trump's trickle-down tax swindle?
The answer to both of these questions is a resounding no. Under the tax bill, it's only the tax cuts for the rich that will be permanent. Workers and the poor will see their taxes raised over time, largely negating any benefits they might receive now.
And even if corporations promise to create new jobs and invest in their workers, there is simply no way to hold them accountable to these promises.
Under past tax windfalls, like those passed under George W. Bush at the start of the 2000s, corporations didn't use the extra money to benefit the country as a whole.
Instead, they simply pocketed the extra cash, increasing corporate mergers and buybacks of their own stock, further enriching themselves and their wealthy shareholders. As Zaid Jilani wrote last year in The Intercept:
From 2004 to 2005, the Bush administration and Congress tried a one-time tax repatriation holiday, cutting the rate to 5.25 percent.
A Senate study in 2011 found that corporations brought $312 billion they had stashed overseas back to the United States, avoiding $3.3 billion in taxes as a result of the repatriation rate. But the top 15 companies that took advantage of the holiday actually reduced their total U.S. employment by 20,931 jobs.
Despite the reports that corporations are deciding to use a small fraction of the windfall for decent ends this time around, there are indications that many of those same corporations intend to invest far more in buybacks and corporate consolidation, thanks to the tax bill.
And with corporate profits and stock-market prices currently hitting all time record highs--a continuing trend that began soon after the economic crisis in 2007-08--there is no reason why companies needed a monstrous tax giveaway to enable them to invest in their workers in the first place.
HOWEVER, IN all the debate and outrage over the GOP tax bill, there is one pertinent fact that has largely escaped consideration: Most corporations pay little to nothing in taxes anyway, regardless of whether the official corporate income tax rate is 21 percent or 35 percent.
For decades, Congress' investigative agency, the Government Accountability Office, has routinely released reports finding that up to two-thirds of U.S. corporations pay no federal income tax year after year. This is possible because of the seemingly endless number of deductions and credits that corporations are legally allowed to claim under the convoluted U.S. tax code.
One of the most common ways that corporations avoid paying taxes is by deducting their losses from one year on their tax returns for subsequent years. Thus, if a corporation records a net loss of $200 million in one year, and makes $50 million in profit for the next four years, they can avoid being taxed for five years in a row.
Donald Trump himself used this strategy by claiming a $916 million loss on his 1995 tax return, a move that probably allowed him to avoid paying a cent in taxes for nearly two decades.
These rules are a clear example of how the U.S. tax code is crafted by corporate lobbyists and think tanks to benefit the rich at the expense of the poor.
The vast majority of the working population is not allowed to claim expenses and debts as losses in order to avoid paying taxes. Instead, our wages are treated as a perpetual source of loot, which the ruling class uses to fund war, corporate subsidies and tax cuts for the 1 percent.
The Republican tax bill doesn't alter this fundamental class bias of the U.S. tax code--it will only make it even easier for corporations to continue paying little to nothing in tax, as they had already done when the corporate tax rate was 35 percent.
So it's no wonder now that these corporations--many of which love to tout their liberal values--are returning the favor by giving Trump bogus propaganda about how his tax breaks are creating jobs and investments.