Originally published September 11 2015
How Americans subsidize big corporations that are then allowed to keep profits offshore and avoid paying taxes
by J. D. Heyes
(NaturalNews) Conservatives in Congress have been working to kill off the Ex-Im (Export-Import) Bank because they say it is little more than an entity that doles out corporate welfare. In fact, it does more than that; it also allows multi-billion dollar corporations to dodge taxes.
The Washington Times reports that American companies managed to benefit from more than $65 billion in taxpayer-backed loan guarantees and then kept almost $458 billion in profits offshore, thereby avoiding paying billions in taxes to the very same government allegedly helping them sell their goods overseas at competitive rates, a Watchdog.org investigation found.
The total figures came from an analysis by Watchdog.org of several databases from the Ex-Im Bank, the Institute on Taxation and Economic Policy and through filings by corporations. The data reveals that 50 companies were able to earn billions of dollars in export profits using the bank's guarantees, but in turn, they keep almost a half-trillion in profits offshore, out of the reach of the Internal Revenue Service.
The Times, citing the Watchdog.org data, further reported:
The offshore proceeds of the companies benefiting from the bank, if taxed at the 35 percent corporate tax, would have contributed as much as $160 billion to U.S. coffers between 2012 and 2014, the analysis shows.
The executive director of the Institute on Taxation and Economic Policy, Matt Gardner, told the Times that U.S. companies benefiting from taxpayer-backed loans while also keeping some profits offshore are shortchanging working Americans who are subsidizing them.
Rigged system
"It's pretty ludicrous that the federal government would subsidize any company engaging in this kind of tax avoidance," he said. "But it's not surprising, because the way the federal government and Congress spend money and conduct the tax system are basically disconnected. They don't talk to each other."
The Ex-Im Bank, founded 71 years ago, mostly guarantees loans for private lenders or government borrowers for foreign governments, countries and other entities that want to buy American-built products. A number of U.S. companies benefit from such loans because their products are being bought by the entities with the government's assistance. However, the bank's future remains in doubt as conservative opponents in Congress say it amounts to nothing more than "corporate welfare" and they have vowed to block its reauthorization this fall.
In another startling example, multibillion-dollar corporation General Electric Co. and its subsidiaries have exported some $5 billion worth of products since 2006 using the bank's loan guarantees. However, the analysis found that in just the past three years, the company has socked away some $120 billion in profits offshore. That is more than double the amount of deferred taxes of any other company that got the bank guarantees, records show.
Other large corporations are also guilty
General Electric spokeswoman Meghan Thurlow declined an interview request but said that the company pays $1 billion in federal, state and local taxes as well as U.S. income taxes.
"We support corporate tax reform, even if that means higher taxes for GE, and support renewing the U.S. Export-Import Bank because both will help us compete around the world and create more jobs at home," the statement said.
Some of the same conservatives have said the current U.S. corporate tax rate of 35 percent – the highest in the industrialized world – is too high and reduces American companies' competitiveness.
An analysis of Securities and Exchange Commission records by the group Citizens for Tax Justice, an advocacy organization and think tank, found that GE's effective income tax rate was actually less than 2 percent over the past five years; the company paid no federal income taxes in 2010 and 2014.
"In another example, Boeing Co., the largest U.S. exporter of manufactured products, received $57 billion in taxpayer-backed loan guarantees since 2006, but has kept $800 million in corporate funds offshore, avoiding U.S. taxes," the Times reported, citing the Watchdog.org findings.
Sources include:
WashingtonTimes.com
Watchdog.org
NaturalNews.com
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