Yes, corporate tax havens cost you too!
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Surprise, surprise, surprise! The same day Cardinal Maradiaga condemned unethical business practices that do nothing to help those at the bottom of society, a report was released that shows a majority of Fortune 500 companies stash their money offshore to avoid U.S. taxes. The practice cheats American taxpayers out of $90 billion per year.
LOS ANGELES, CA (Catholic Online) - Several Fortune 500 companies, using no more than an offshore post office box, are banking hundreds of billions of dollars in offshore tax havens. The estimated $90 billion shortfall in U.S. taxes is made up by taxpayers who pay higher rates or will pay higher rates later as interest on federal debt.
This practice costs every man, woman and child in America about $300 per year in extra taxes. However, it keeps corporate balance sheets looking better and makes millionaires richer.
Corporate bosses have a fiduciary responsibility to build shareholder value. Part of that pursuit is to protect income from tax burdens imposed by various governments. However, there is another responsibility which is being shirked, which is a responsibility to the people of the United States, often where these businesses make much of their money.
Such practices may boost the bottom line, which is great for investors, but it hits Americans in the pocketbook each tax cycle.
So who are the culprits?
Apple, GE, Microsoft, Pfizer and Merck are listed as the top savers using these tactics. The Netherlands, Singapore, Hong Kong, Luxembourg, the Caymans and Ireland are the places used for these havens.
The blame is not entirely on corporations, which are simply acting as corporations naturally do. Instead, it is up to Congress to close these tax loopholes by passing laws that require payments regardless of where the money goes.
Banks also bear some burden for operating these tax havens. The prime offender is Bank of America, which maintains some 264 tax havens.
It is believed that more tax havens exist and more businesses are using them, but they remain unknown to the federal government for various reasons.
Corporations in the United States are heavily taxes, paying a rate of about 35 percent, which is about 10 percent higher than is usually paid in the industrialized world. Corporations also lobby Congress heavily to keep loopholes open which are worth billions to them over several years.
Despite all this, it's that much less money for the government to spend on social programs and education, and it's less money in the hands of private citizens where it could do the most good of all.
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