Europe calls out corporate tax schemes our politicians won’t
You’ll have to forgive Amazon for getting a little flustered when the British Parliament publicly blasted the company for “gaming the system” to dodge paying taxes.
Amazon is an American company. They’re used to far more deferential treatment.
Responding to how the company paid only $7 million in taxes despite selling $7 billion in goods in England, a furious British committee chairwoman told one of Amazon’s executives: “I don’t know what you take us for.”
They took you for the kind of easy marks they have back home?
Amazon didn’t say that, of course. But what they are accused of in Europe — setting up an office in a tax haven to lower their entire tax burden — is pretty much standard operating procedure for big corporations here in the U.S. And not only do our politicians rarely question it, in Congress they seem to spend most of their time holding hearings on how to cut corporate taxes even more.
The past five-year period has been the easiest on U.S. corporations tax-wise since the 1920s. Between 2009 and 2013, just 8.5 percent of all federal revenue was collected from corporate income taxes. By contrast, in the 1950s corporate taxes made up nearly 30 percent.
Yet scarcely a day passes without a new story of a U.S. company trying to decamp the U.S., or set up some other scheme, in order to pay even less here.
What was so interesting about the series this newspaper just ran on Amazon’s experiences in Europe isn’t what the company is doing over there. They are as anti-tax and anti-union as they are here. So give them points for consistency.
What’s interesting is the pushback in Europe. Even high officials in the government are recoiling. Britain’s conservative prime minister, David Cameron, was quoted as decrying such “tax dodging” by companies like Amazon, saying, “The public who buy from them have had enough.”
Jeff Reifman, an ex-Microsoft multimillionaire who has been a sort of one-man town crier about Microsoft’s tax-avoidance schemes over the past decade, said companies here are almost never subjected to anywhere near that level of official questioning.
Example: Two years ago a U.S. Senate committee revealed how Microsoft uses subsidiaries in Puerto Rico and Bermuda to shift up to half its revenues offshore, thus allowing it to skirt $6.5 billion in taxes — more than $4 million per day from the Puerto Rican operation alone.
A group of more than a hundred small-business owners from Washington state then wrote to Microsoft and implored it to “do the right, fair and moral thing” — pay its fair share of taxes. The letter was ignored. Other than that, the revelation caused nothing at all to happen. A bill to address offshore tax havens attracted just four co-sponsors — notably none from Microsoft’s home state.
“The corporations have won on these issues, and they know it,” Reifman says. “They just laugh at this stuff. They know there’s not going to be any price to pay. Not in the U.S. anyway.”
Asking them to be patriotic or shaming them seems like a fool’s errand, though. What they’re doing is legal. So it’s up to the government to take charge and change it.
I say this to Reifman, who, like a corporation, laughs at me!
“This isn’t a functioning democracy anymore,” he said. “It’s a corporatocracy. There isn’t going to be some ‘Mr. Smith Goes to Washington’ moment that changes any of this.”
No, probably not. You don’t get your share of the national tax burden cut by two-thirds in 50 years by happy accident. Plus, corporations now have the ability to pump unlimited amounts of money into the election system.
I know that writing “Hey, let’s be more like the Europeans” probably makes it even less likely that people in power will question the tax tactics of Amazon, Microsoft or any of our swashbuckling tech companies. But I’m glad somebody is.
