WASHINGTON (AP) – Eighty-three of the nation’s 100 largest corporations, including Citigroup, Bank of America and News Corp. (NWSA), had subsidiaries in offshore tax havens in 2007, and some of the companies received federal bailout funding, a government watchdog said Friday.
The Government Accountability Office released a report that said Bank of America Inc., Citigroup Inc. (C) and Morgan Stanley (MS) all had more than 100 units in countries that maintain low or no taxes. The three financial institutions were included in the $700 billion financial bailout approved by Congress.
Insurance giant American International Group Inc. (AIG), which has received about $150 billion in bailout money, had 18 subsidiaries. JPMorgan Chase & Co. (JPM) had 50 units and Wells Fargo & Co. (WFC) had 18; both financial institutions received government bailout money.
1. If our corporate tax rate wasn’t the second highest in the world, maybe companies wouldn’t feel the need to establish subsidiaries in lower tax jurisdictions.
2. The government shouldn’t be in the bailout business at all, much less companies that seek to avoid paying taxes.
Sens. Carl Levin, D-Mich., and Byron Dorgan, D-N.D., who requested the report, have pushed for tougher laws to fight offshore tax havens around the globe. Levin, who leads the Senate Permanent Subcommittee on Investigations, has estimated abusive tax havens and offshore accounts cost the U.S. government at least $100 billion a year in lost taxes.
“I think we should take action to shut down these tax dodgers and we will be introducing legislation to do just that,” Dorgan said.
How exactly are they going to accomplish that? Do they think they have the power to force other countries to raise taxes? Are they going to “shut down” all these companies? Will they not allow companies from low tax regimes do business in America? Does that include Ireland and Hong Kong?
If lower tax rates attract companies, isn’t the obvious solution to lower corporate tax rates? Wouldn’t it be nice if other countries were complaining about how all these companies were setting up in the US to avoid higher taxes in other places? Wouldn’t that be a better stimulus plan than spending a whole bunch of money we don’t have?