Tags: Reich | tax | corporate | ransom

Robert Reich: Corporations Are Holding Countries for Ransom

By Michael Kling   |   Wednesday, 22 May 2013 08:11 AM

Global corporations are pitting nations against each other in a calculated effort to avoid taxes and gain government subsidies, asserts Robert Reich, former Labor Department secretary.

Reich doesn't mince words when describing tax strategies of global corporations.

Big corporations, including Google, Amazon, Starbucks and big Wall Street banks, are sheltering as much corporate taxes overseas as possible. They say lower corporate taxes are necessary to keep the United States competitive.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

"Baloney," Reich, a professor at the University of California, Berkeley, writes on his blog. "The fact is, global corporations have no allegiance to any country; their only objective is to make as much money as possible — and play off one country against another to keep their taxes down and subsidies up."

As he describes it, big corporations are holding nations ransom.

Big corporations aren't just angling to pay low, or no, taxes in the United States.

Goldman Sachs just negotiated a "sweetheart deal" with Britain to settle a tax dispute, Reich notes. Moreover, Google is manipulating its British sales to pay almost no taxes to that country by using its low-tax Ireland subsidiary, and Amazon sends its sales through a subsidiary in low-tax Luxembourg, while getting more in British subsidies than it pays in taxes.

The natural reaction should be for nations to join together to gain more bargaining power, he says. Instead, the opposite is happening: "Xenophobia is breaking out all over."

More Britons favor leaving the European Union, and right-wing nationalist parties are gaining ground on the European continent.

And in the United States, Republicans are sounding increasingly nationalistic, with their anti-immigrant and anti-trade rhetoric. In addition, Reich says, they "continue to push 'states rights' — as states increasingly battle against one another to give global companies ever-larger tax breaks and subsidies.

"Nothing could strengthen the hand of global capital more than such breakups."

Reich didn't even mention Apple, which Sen. John McCain, R-Ariz., is calling one of the biggest corporate tax dodgers. The Senate Permanent Subcommittee on Investigations says Apple has $102 billion in offshore accounts and that it paid little or no taxes in recent years.

Its main offshore holding company, Apple Operations International, had $30 billion in net income from 2009 to 2012, yet did not declare a tax residence, file a corporate tax return or pay any income tax to any nation, Bloomberg reported.

"Apple wasn’t satisfied with shifting its profits to a low-tax offshore tax haven," Sen. Carl Levin, D-Mich., chairman of the panel, said in a prepared statement. "Apple sought the Holy Grail of tax avoidance. It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere."

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

© 2015 Newsmax Finance. All rights reserved.

1Like our page

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved