GE and Exxon pay no U.S. taxes; they shouldn't have unlimited "free speech"

The Supreme Court recently granted corporations the right to spend unlimited amounts to buy favorable U.S. election results. Corporations can bribe contribute to any candidate’s election or run massive ad campaigns against any legislator who refuses to do their bidding. They don’t even need to spend the money. They just need to say to legislator X, “Vote the wrong way on this legislation and we’ll give your next opponent $25 million.”

Here’s the (right-wing controlled) Supreme Court’s “logic”:

  1. Corporations are American citizens
  2. American citizens have a right to free speech
  3. Free speech equals the right to spend millions or even billions of dollars advocating for your views, for your favored legislative candidates and against legislators you oppose

The first claim is patently false. It’s “We the people,” not “we the corporations.” Mega-corporations are not American citizens.

In fact, most mega-corporations aren’t even American corporations! Most have huge global operations. General Motors, to name but one example off the top of my head, now makes most of its profit in China.

And the third claim is absurd. Even citizens' rights to contribute cash to political candidates is limited.

But here’s where I really get lost. Imagine that I — perhaps because of this wonderful blog — earned $10 billion last year… but didn’t pay a dime in taxes. What would happen to me? My assets would be seized, and I’d be thrown in prison. My wife too, because she also signs our tax returns.

Well, then how does GE — an “American” company — earn $10.3 billion last year and not only pay no income tax but even generate “a tax benefit of $1.1 billion”??? And why should GE be able to spend whatever it wants influencing U.S. elections when it doesn’t pay a dime on its $10 billion in profits???

Similarly, Exxon earned $35 billion last year, but “of $15 billion in income taxes last year, Exxon paid none of it to Uncle Sam”. Chevron, which earned $18.5 billion paid $0.2 billion in U.S. taxes. Bank of America earned $4.4 billion but paid NEGATIVE $1.9 billion. Forbes explains, “With a provision for credit losses of $49 billion, Bank of America probably won’t be paying taxes for a long time.”

These companies are earning billions — even tens of billions — of dollars in profit, paying no taxes, yet it getting unlimited “free speech” to buy U.S. election results?!?!?!

How can these firms do this? One golden loophole Washington gives global corporations: The right to defer — forever — paying U.S. taxes on overseas profits. That’s a loophole American citizens abroad don’t get. U.S. citizens earning money abroad still owe U.S. taxes on those earnings. The IRS explains:

Income from Abroad is Taxable…

If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S….

You will face serious consequences if the IRS finds you have unreported income or undisclosed foreign financial accounts. These consequences can include not only the additional taxes, but also substantial penalties, interest, fines and even imprisonment.

The IRS should add “…unless you’re a corporation, in which case you can disregard this and not pay any taxes on overseas earnings, unless you want to.”

And corporations aren’t even content with this golden goose! Companies then use accounting gimmicks to book artificial profits outside of America and book artificial expenses inside America, thus pretending most of their American profit is actually overseas profit: “figures tax economist Martin Sullivan, companies are keeping some $28 billion a year out of the clutches of the U.S. Treasury by engaging in so-called transfer pricing arrangements, where, say, Microsoft’s overseas subsidiaries license software to its U.S. parent company in return for handsome royalties (that get taxed at those lower overseas rates)”.

That GE could pay no taxes on $10 billion in profits and Exxon none on $35 billion proves that corporations already owned Washington before the outrageous Supreme Court ruling. Now, this problem will only feed further on itself.

Can’t we at least agree corporations that pay no U.S. taxes can’t buy U.S. politicians?

Posted by James on Monday, April 05, 2010