U.S. Companies Ducking Upwards Of Billions In Taxes, And It’s Legal!
You hear talk of our 14 trillion dollar deficit in America being thrown around as if we are doing something completely wrong as a country. But when most of our money rests in the uber-wealthy, it's hard to not put the blame on the Googles and Microsofts of the country isn't it? They ask for tax cuts to help create jobs for the middle America, but in reality, many of those companies are already 'stealing' billions from our country while paying other countries!
It's a technique called the "Dutch Sandwich" or "Double Irish" and allows the companies to not pay the U.S. (yes, us) billions of dollars by paying a lesser income tax percentage to get this -- other countries! Even if all their business is in the States. Time to get educated people, companies that make lots of money do just that, and we empty our pockets, lint and all, to help them succeed.
It's great that innovators and entrepreneurs take advantage of the opportunities in America to become successful, but shouldn't they keep up the motto all of us hard working people of Bozeman generally stick to, "shop local"?
Hopefully I've got you interested. Read details of the report below and get informed about the American Jobs Creation Act that actually doesn't create jobs but does save these companies billions.
And please, please, please if you can see a way this is at all beneficiary for the 99% of Americans that pay all of their taxes back to America, let me know in the comments below.
Jesse Drucker - Bloomberg
In October, Drucker reported that Google had saved $3.1 billion in taxes in the past three years by shifting the majority of its foreign profits into accounts in Ireland, the Netherlands and Bermuda using financial techniques called "the Dutch Sandwich" and "the Double Irish" arrangement. Basically, he says, Google credited its Irish office with the majority of its non-U.S. sales revenue — and then shuttled that money through various subsidiaries located in Ireland and other countries to save billions in tax dollars.
"You have an Irish operating company out there selling ads — they actually have real employees in Dublin," he explains. "They make payments to a Dutch subsidiary with no employees, which in turn makes payments to a Bermuda-headquartered Irish company with no employees. And the result of all of this is that it all helps to cut about $3 billion in Google's income taxes in the last three years."
Other companies have also been able to cut hundreds off their tax bills through shifting or licensing their earnings overseas. Forest Laboratories Inc., the manufacturer of the antidepressant Lexapro, cut its total income tax bill by more than a third last year through allocating income through various subsidiaries.
"They're a company that does almost 100 percent of its sales here in the U.S., they have almost 100 percent of their employees in the U.S., they're headquartered in New York City and yet the majority of their profits show up overseas, most of them attributed to a mailbox in Bermuda," Drucker says. "An economist at Reed College estimated that the U.S. is losing $60 billion a year in federal tax revenue [from all U.S. companies], but she's actually in the process now of revising that estimate and has arrived at a figure closer to $90 billion."
On the American Jobs Creation Act
"In 2004, Congress passed the American Jobs Creation Act, which permitted countries to bring back profits from offshore one time at a reduced rate — paying 5.25 percent instead of 35 percent. And companies brought back about $312 billion that qualified for the break and there's a fair amount of literature that shows very little job creation went on as a result of that. And most of that money was used to buy back stock. And companies right now are lobbying for a repeat of that break."