Tags: Johnston | corporate | tax | welfare

Author Johnston: Corporate Tax Welfare Alive and Well

By    |   Sunday, 23 Sep 2012 06:17 PM

While U.S. corporations like to complain about their maximum 35 percent tax rate, the tax code is actually skewed greatly in their favor, says Pulitzer Prize-winning author David Cay Johnston.

“This isn’t market capitalism: this is corporate socialism,” he tells Yahoo.

One example concerns corporate cash holdings, says the author of the new book "The Fine Print: How Big Companies Use 'Plain English' to Rob You Blind."

A 1909 law forbids companies from keeping more cash than reasonably needed to run their businesses. That law required them to pay a 15 percent penalty if they didn't re-invest the extra cash into their business or pay dividends.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

But a loophole signed by President Ronald Reagan allows companies to escape that penalty if they hold their cash overseas. So some of the biggest companies, such as Apple and Microsoft, now have huge cash hordes abroad.

"The scandal is the law," Johnston says.

The Federal Reserve reports that U.S. corporations have cash reserves of $1.7 trillion. But when you count money held offshore, it’s actually $6 trillion, he estimates.

In the wake of Senate hearings on corporate tax avoidance Thursday, “expect the IRS to take a dimmer view of avoidance schemes going forward,” The Economist says.

“Whether it will prove a match for the multinationals’ phalanxes of lawyers and bean counters is another matter.”

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video


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While U.S. corporations like to complain about their maximum 35 percent tax rate, the tax code is actually skewed greatly in their favor, says Pulitzer Prize-winning author David Cay Johnston.
Johnston,corporate,tax,welfare
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2012-17-23
Sunday, 23 Sep 2012 06:17 PM
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