By RETIII from Daily Kos

I wrote a diary not too long ago, explaining how U.S. corporations artificially hide U.S. profits as “foreign profits.” It is nothing more complicated than accounting tricks. http://www.dailykos.com/…

Surprisingly, for a Daily Kos site, some commentators disagreed that this conduct was inappropriate at all. Other commenters defended the need to eliminate all corporate taxation:

We need to move towards eventually abolishing the corporate tax (long-term) and immediately abolish the repatriation tax (short-term.) If you think this is just me being “out there” Pikkety held an even darker view of the future of corporate tax in Capital in the 21st Century.

The US is almost the only country in the world with a repatriation tax, and it encourages US-owned corporations to horde cash overseas, robbing the US of both capital and tax income.

As to the notion that this scam is not illegal . . . duh. That was the point. I should be; and easily could be.

As to the notion that we should get rid of the corporate tax, or at least make it territorial, there are three points. First, the U.S. taxes corporations’ foreign profits (unlike say Ireland or the Cayman Islands) because the U.S. (unlike say Ireland or the Cayman Islands) assumes the cost of policing the world’s commerce. The U.S. navy ensures safety in world shipping zones; the U.S. defense budget secures the world’s oil supplies; the U.S. enforces “stability” across the globe, and on and on. Does anyone think that U.S. corporations should not contribute to this cost? That U.S corporations should be allowed to point to the tax rate of Latvia as a “comparable”? If everyone pays tax-shelter rates, where would these “market” requirements come from?

Second, a few folks have missed the point that this is not about “extraterritorial” taxation — i.e., taxing foreign profits. The profits are made here in the U.S., and are siphoned off to foreign subsidiaries through simple, almost embarrassing, accounting shams. There is nothing to “repatriate.”

Third, all the belly-aching about the supposedly exorbitant U.S. corporate tax rates ignores one thing shown in the above graph. The contribution of corporate taxes has been replaced (and more) with individual taxes. How could it be that corporate profits are soaring, and the U.S. punitively taxes corporations, and corporate tax receipts are falling off a cliff?

It is simple: tax evasion. Or, since that sounds like a crime, tax avoidance. Either way the answer is not complicated. Close down this obvious sham of pretending that the current $2 trillion or more of U.S. profits are somehow “foreign” profits held “offshore.” Fix incredibly lax tax laws that allow the recent “tax inversions” designed solely to grab those money-laundered amounts. At the very least, don’t pretend that it is not happening. This is actually easy to fix.

For more on this story go to: http://www.dailykos.com/story/2014/09/06/1327714/-Corporate-Privilege#

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