Much has happened in the last few weeks since the most recent Paisano; the tsunami in Japan, spring break and the Libya conflict.
However, the story that stuck out to me the most had to do with the United States Treasury losing an estimated 60 billion dollars in revenue (Kimberly Clausing – Reed College) to offshore tax havens by some of the brightest corporation stars of American progress. Here’s the kicker – all of this wonderful and irresponsible activity by US companies is perfectly legal (GASP!).
I know what you’re thinking. “But, Cliff, I thought companies always consider the best interest of the American people when they make business decisions. Why would they want to avoid paying tax dollars?” I’m glad you asked that question, reader, because the answer for these companies’ actions can be summed up in one word: greed.
Most people are aware that businesses are always trying to maximize profits and minimize costs. Decision making for many of the businesses is driven by the fact that the U.S. has the highest corporate tax rate in the world (35 percent). Companies like Google, Facebook, and Pfizer move their intellectual property like computer code, patents, pill formulas, and logos to other countries that have lower tax rates (according CBS News). According to Jesse Drucker (Bloomberg) Google has cut its taxes by $3.1 billion in the last three years and reduced it’s oversees tax rate to 2.4 percent.
This is especially harsh for Americans because taxpayers helped fund the startup of Google (ouch). Americans, through the U.S. National Science Foundation, funded the research in the mid 1990s at Stanford University that led to Google’s creation (Drucker).
This harsh reality is especially tough as Texas is facing a budget shortfall of $27 billion. There is no magic bullet when it comes to curing the shortcomings of the U.S. and Texas budget deficits. President Obama has proposed that the corporate tax rate be lowered, while also trying to eliminate loopholes in the tax code.
This sounds like an easy solution, but big businesses have a large lobbying presence in Washington. The truth of the matter is that many of these large companies that are holding back the change of our tax code are the same people who helped tank our economy in the first place.
I’d like to tell you a little story about U.S 26th President Theodore (Teddy) Roosevelt. Roosevelt knew that corporations had too much power in the U.S. at the beginning of the 20th century. He believed that businesses had to be heavily regulated and watched if they were going to operate in the best interest of the American people.
Roosevelt said “to destroy this invisible government, to dissolve the holy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day. This country belongs to the people. Its resources, its business, its laws, its institutions, should be utilized, maintained, or altered in whatever manner will best promote the general interest.”
Wouldn’t it be a crazy idea if big businesses and the congress acted like they actually cared more about you and me than about appeasing themselves and fattening their wallets? Maybe then we could find ways to keep from cutting school budgets. I don’t know about you, but I’m tired of being kicked in the groin.