tagged w/ Tax Dodger
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As Obama demands rich Americans pay more in taxes, the IRS reveals 36 White House staff are far behind in their own taxes. That's an average of $23,138 per staff member!
How embarrassing this must be for President Obama, whose major speech theme so far this campaign season has been that every single American, no matter how rich, should pay their "fair share" of taxes.
Because how unfair -- indeed, un-American -- it is for an office worker like, say, Warren Buffet's secretary to dutifully pay her taxes, while some well-to-do people with better educations and higher incomes end up paying a much smaller tax rate.
Or, worse, skipping their taxes altogether.
A new report just out from the Internal Revenue Service reveals that 36 of President Obama's executive office staff owe the country $833,970 in back taxes. These people working for Mr. Fair Share apparently haven't paid any share, let alone their fair share.
Previous reports have shown how well-paid Obama's White House staff is, with 457 aides pulling down more than $37 million last year. That's up seven workers and nearly $4 million from the Bush administration's last year.
Nearly one-third of Obama's aides make more than $100,000 with 21 being paid the top White House salary of $172,200, each.
The IRS' 2010 delinquent tax revelations come as part of a required annual agency report on federal employees' tax compliance. Turns out, an awful lot of folks being paid by taxpayers are not paying their own income taxes.
The report finds that thousands of federal employees owe the country more than $3.4 billion in back taxes. That's up 3% in the past year.
That scale of delinquency could annoy voters, hard-pressed by their own costs, fears and stubbornly high unemployment despite Joe Biden's many promises.
The tax offenders include employees of the U.S. Senate who help write the laws imposed on everyone else. They owe $2.1 million. Workers in the House of Representatives owe $8.5 million, Department of Education employees owe $4.3 million and over at Homeland Security, 4,697 workers owe about $37 million. Active duty military members owe more than $100 million.
The Treasury Department, where Obama nominee Tim Geithner had to pay up $42,000 in his own back taxes before being confirmed as secretary, has 1,181 other employees with delinquent taxes totaling $9.3 million.
As usual, the Postal Service, with more than 600,000 workers, has the most offenders (25,640), who also owe the most -- almost $270 million. Veterans Affairs has 11,659 workers owing the IRS $151 million while the Energy Department that was so quick to dish out more than $500 million to the Solyndra folks has 322 employees owing $5 million.
The country's chief law enforcement agency, the Department of Justice, has 2,069 employees who are nearly $17 million behind in taxes. Like Operation Fast and Furious, Attorney General Eric Holder has apparently missed them too.
As with ordinary people, the IRS attempts to negotiate back-tax payment plans with all delinquents, whose names cannot be released. But according to current federal law, the only federal employees who can be fired for not paying taxes are IRS workers.As Obama demands rich Americans pay more in taxes, the IRS reveals 36 White House... more
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By Peter S. Green - Jul 8, 2011 3:23 PM ET
Caterpillar Said to Demote Whistle Blowing Exec
Peoria-based Caterpillar, which reported year over year earnings growth exceeding 250 percent in each of the last two quarters, is among several U.S. multinationals asking Congress to end U.S. corporate income taxes on profits earned abroad. Photographer: Robert Gilhooly/Bloomberg
A Caterpillar Inc. Facility in Illinois
A Caterpillar Inc. facility stands in Morton, Illinois on July 3, 2011. Photographer: Daniel Acker/Bloomberg
Caterpillar CEO Douglas Oberhelman
Douglas Oberhelman, chairman and chief executive officer of Caterpillar Inc. Photographer: Andrew Harrer/Bloomberg
Caterpillar Inc. used offshore subsidiaries in Switzerland and Bermuda to avoid about $2 billion in U.S. taxes from 2000 to 2009, boosting its earnings through a “tax and financial statement fraud,” according to a Caterpillar executive’s lawsuit.
The company, the world’s largest construction-equipment maker, sold and shipped spare parts globally from an Illinois warehouse while improperly attributing at least $5.6 billion of profits from those sales to a unit in Geneva, according to the suit filed by Daniel J. Schlicksup. He was a global tax strategy manager for Caterpillar from 2005 to 2008.
Schlicksup, 49, sued in U.S. District Court in Peoria, Illinois, in 2009, claiming he was moved to a job that limits his career opportunities because he complained to superiors that the “Swiss Structure” ran afoul of U.S. tax rules. He’s seeking a court order to give him back his old job and prevent any retaliation. He also seeks stock options that he claims were wrongly withheld as well as legal fees and punitive damages.
His lawsuit, which calls the structure a “tax dodge,” followed a request for job protection he filed with the U.S. Department of Labor under provisions of the Sarbanes-Oxley Act, court records show. The law bars retaliation against corporate whistleblowers. Schlicksup declined to comment for this story. His attorney, Dan O’Day, declined to say whether Schlicksup has taken his concerns to the Internal Revenue Service.By Peter S. Green - Jul 8, 2011 3:23 PM ET
Caterpillar Said to Demote Whistle... more
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One of the top priorities for Republicans this year has been to preserve and extend corporate tax breaks. This includes GOPers like former Minnesota governor Tim Pawlenty and Rep. Louie Gohmert (R-TX) who have eagerly defended corporations like Bank of America, ExxonMobil, and GE which have avoided paying a dime in corporate income taxes in recent years, but rake in huge annual profits.
Another one of those companies making millions in profits but failing to pay any corporate income tax is Arch Coal. In 2009, for instance, the corporation netted over $42 million, yet was able to use tax loopholes and gimmicks to avoid contributing anything in corporate income taxes.
ThinkProgress asked Gingrich about these corporate tax-dodgers this week at a St. Patrick’s Day breakfast in Nashua, New Hampshire. Gingrich defended Arch Coal and other corporations who avoided paying income taxes because “they don’t owe that” to the U.S. government. Striking an anti-populist note, the former House Speaker also praised the fact that even though many corporations were avoiding taxes, their employees would still be forced to contribute to the government’s coffers.
Gingrich concluded by enthusiastically championing corporate tax loopholes, telling ThinkProgress that corporations were using “an incentive…not a loophole.” “We should celebrate that as a good thing,” Gingrich added:
KEYES: There have been a lot of complains from the left and right about corporations not paying their fair share in taxes. For instance, Arch Coal in 2009 made $42 million but paid nothing in corporate income tax. What are your thoughts on that?
GINGRICH: My thoughts are I’m opposed to tax increases. I want to create more jobs in America, not fewer.
KEYES: But they’re not paying anything right now in corporate income tax.
GINGRICH: But you don’t know why they’re not paying anything. Did they buy new equipment? Did they do things that actually create jobs? I can’t give you an answer for any one company.
KEYES: But in general, corporations who are making millions and millions in profit but then not contributing anything to the United States government. Do you think that’s fair?
GINGRICH: First of all, if they make millions and millions in profit, they probably employ thousands and thousands of people and those thousands and thousands of people are contributing a lot to America. I am for the maximum job creation in the United States and I think that means lower taxes, not higher taxes. It means less regulations, not more regulation.
KEYES: But you don’t think we should try to be forcing them to pay what they owe?
GINGRICH: First of all, they don’t owe that. If what they did was legal, and if it was designed to create more jobs. For example, if we gave you 100 percent write-off for new equipment so you could compete with China, and you use that 100 percent write-off, you actually did what we wanted you to do. [...] You have to go ask Arch [Coal] “what is it they did right in order to lower their tax liability and did it create jobs in America?”
KEYES: Would you like to see those corporate tax loopholes closed though? [crosstalk]
GINGRICH: I just want to say this because it’s an important difference in how we approach this. If we give you an incentive to do something right that creates more jobs, that is not a loophole. That’s an incentive. If you then intelligently follow that incentive and create more jobs, we should celebrate that as a good thing.
http://thinkprogress.org/2011/03/18/gingrich-corp-taxes/One of the top priorities for Republicans this year has been to preserve and extend... more
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Today, hundreds of thousands of people comprising a Main Street Movement — a coalition of students, the retired, union workers, public employees, and other middle class Americans — are in the streets, demonstrating against brutal cuts to public services and crackdowns on organized labor being pushed by conservative politicians. These lawmakers that are attacking collective bargaining and cutting necessary services like college tuition aid and health benefits for public workers claim that they have no choice but than to take these actions because both state and federal governments are in debt.
But it wasn’t teachers, fire fighters, policemen, and college students that caused the economic recession that has devastated government budgets — it was Wall Street. And as middle class workers are being asked to sacrifice, the rich continue to rig the system, dodging taxes and avoiding paying their fair share.
In an interview with In These Times, Carl Gibson, the founder of US Uncut, which is organizing some of today’s UK-inspired massive demonstrations against tax dodgers, explains that while ordinary Americans are being asked to sacrifice, major corporations continue to use the rigged tax code to avoid paying any federal taxes at all. As he says, if you have “one dollar” in your wallet, you’re paying more than the “combined income tax liability of GE, ExxonMobil, Citibank, and the Bank of America“:
[Gibson] explains, “I have one dollar in my wallet. That’s more than the combined income tax liability of GE, ExxonMobil, Citibank, and the Bank of America. That means somebody is gaming the system.”
Indeed, as politicians are asking ordinary Americans to sacrifice their education, their health, their labor rights, and their wellbeing to tackle budget deficits, some of the world’s richest multinational corporations are getting away with shirking their responsibility and paying nothing. ThinkProgress has assembled a short but far from comprehensive list of these tax dodgers — corporations which have rigged the tax system to their advantage so they can reap huge profits and avoid paying taxes:
- BANK OF AMERICA: In 2009, Bank of America didn’t pay a single penny in federal income taxes, exploiting the tax code so as to avoid paying its fair share. “Oh, yeah, this happens all the time,” said Robert Willens, a tax accounting expert interviewed by McClatchy. “If you go out and try to make money and you don’t do it, why should the government pay you for your losses?” asked Bob McIntyre of Citizens for Tax Justice. The same year, the mega-bank’s top executives received pay “ranging from $6 million to nearly $30 million.”
- BOEING: Despite receiving billions of dollars from the federal government every single year in taxpayer subsidies from the U.S. government, Boeing didn’t “pay a dime of U.S. federal corporate income taxes” between 2008 and 2010.
- CITIGROUP: Citigroup’s deferred income taxes for the third quarter of 2010 amounted to a grand total of $0.00. At the same time, Citigroup has continued to pay its staff lavishly. “John Havens, the head of Citigroup’s investment bank, is expected to be the bank’s highest paid executive for the second year in a row, with a compensation package worth $9.5 million.”
- EXXON-MOBIL: The oil giant uses offshore subsidiaries in the Caribbean to avoid paying taxes in the United States. Although Exxon-Mobil paid $15 billion in taxes in 2009, not a penny of those taxes went to the American Treasury. This was the same year that the company overtook Wal-Mart in the Fortune 500. Meanwhile the total compensation of Exxon-Mobil’s CEO the same year was over $29,000,000.
- GENERAL ELECTRIC: In 2009, General Electric — the world’s largest corporation — filed more than 7,000 tax returns and still paid nothing to U.S. government. They managed to do this by a tax code that essentially subsidizes companies for losing profits and allows them to set up tax havens overseas. That same year GE CEO Jeffery Immelt — who recently scored a spot on a White House economic advisory board — “earned total compensation of $9.89 million.” In 2002, Immelt displayed his lack of economic patriotism, saying, “When I am talking to GE managers, I talk China, China, China, China, China….I am a nut on China. Outsourcing from China is going to grow to 5 billion.”
- WELLS FARGO: Despite being the fourth largest bank in the country, Wells Fargo was able to escape paying federal taxes by writing all of its losses off after its acquisition of Wachovia. Yet in 2009 the chief executive of Wells Fargo also saw his compensation “more than double” as he earned “a salary of $5.6 million paid in cash and stock and stock awards of more than $13 million.”
In the coming months, politicians across the country are going to tell Americans that the only way to stave off huge deficit and balance the budgets is by gutting programs for the poor, eviscerating support for the middle class, eliminating labor rights, and decimating the government’s ability to serve the public interest. This is a lie. The United States is the richest country in the history of the world, and income inequality is higher now than it has been at any time since the 1920′s, with the top “top 1 percentile of households [taking] home 23.5 percent of income in 2007.”
It is simply unfair for Main Street Americans who’ve already been battered by one of the worst economic crises in our history to have to continue to sacrifice while the rich and well-connected continue to rip off taxpayers and avoid paying their fair share. That’s why a Main Street Movement consisting of Americans who are fed up with the status quo is rocking the nation, and one of its first targets should be tax dodgers like Bank of America and Boeing.
http://thinkprogress.org/2011/02/26/main-street-tax-cheats/Today, hundreds of thousands of people comprising a Main Street Movement — a... more
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A United States tax amnesty, part of a campaign to crack down on perceived tax havens such as Switzerland, has netted 7,500 repentant tax dodgers.
An investigation into UBS, that found that the Swiss bank had helped US citizens evade tax, helped fuel a crusade to weed out cheats who were using offshore accounts to hide undeclared assets.
The amnesty, that ended on October 15, offered reduced punishments for those who voluntarily declared their guilt. Culprits will pay a fine between five and 20 per cent of their stashed assets as opposed to a 50 per cent levy and a possible prison sentence faced by those who did not come forward.
The IRS even extended the amnesty for a month to help tax lawyers cope with a deluge of worried clients who wanted to come forward.
It is not yet clear how many of the 7,500 had accounts in Switzerland. But Doug Shulman, commissioner of the Internal Revenue Service (IRS), said the disclosures would be scoured to identify which institutions had helped the tax evaders.A United States tax amnesty, part of a campaign to crack down on perceived tax havens... more
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Where is Microsoft based? Redmond in Washington State, you might say. Except that when it comes to licensing its software, apparently that all happens from an office in Reno, Nevada. At least, that's where it records its software licensing revenue.
Seem odd? Certainly. Why? Because it means it doesn't pay a tax on software licensing, which Washington State applies. And according to Jeff Reifman - who has written a devastating blogpost rectifying this bit of tax, er, avoidance* (because Washington State is facing a deficit of $430m in its biennial budget) could balance the state's budget:
Over the past thirteen years, I estimate that Microsoft has avoided paying more than $707 million in taxes on sales of its corporate software licenses (see Citizen Microsoft and Microsoft's $528 million Washington tax break). Although the majority of its software development is performed in Washington State, Microsoft records its estimated $18 billion in licensing revenue per year through a corporate office in Reno, Nevada where there is no licensing tax.
To quote the Northern Nevada Business Weekly (linked from the Microsoft Licensing site):
A good-sized piece of Microsoft's $58 billion in revenues in its last fiscal year touched ground, however briefly, in the company's licensing operation in Reno.
And a Microsoft executive says the operation is likely to continue growing at about the same pace as the rest of the software giant headquartered at Redmond, Wash.
And among the things that Microsoft identified as being needed to be a great community, according to Chris Weber, a Microsoft vice-president, in that interview, is
Community involvement. People want to work for a company that gives back to the local community, Weber said.
Perhaps it depends which "local" community you're talking about. As the Microsoft Licensing site says, "It's amazing what you can do here". Why, yes, it is. Like cutting your tax bills by millions of dollars. That's pretty amazing in anyone's books.
Back to Reifman:
Under [Washington] state's 0.484 percent software royalty tax(lowered from 1.5 percent in 1998 after industry lobbying), I estimate that Microsoft should have paid more than $90 million in 2008 and $87 million in 2009 in state taxes.
Those aren't trivial amounts. Reifman suggests that Microsoft has been doing this for 13 years, and that the back taxes owed amount to $707m. (It would have been $2.8bn if the software royalty tax hadn't been lowered following industry lobbying, he calculates.)
As he also points out,
Since Microsoft began operations in Reno in 1997, it has enjoyed record-setting revenue of more than $446 billion and profit of more than $124 billion. If it paid its actual tax bill in full today, it would still have more than $24 billion in cash holdings.
Still puzzled? Reifman set out how it works in an earlier article in Crosscut (linked above):
Here's how the practice works: Microsoft's product teams, based mostly in Redmond and Issaquah, build software products such as Windows Vista, Windows Server, SQL Server, and Office. But sales of these products to PC manufacturers and corporate customers are conducted from a License and Operations office in Reno, Nev., where there is no corporate income tax. Microsoft records the revenue for these sales (traditionally about 31 percent of overall revenue) in Nevada and does not pay the Washington business and occupation tax required on software reproduction.
Mm. I'd say Microsoft has some questions to answer. Reifman has also blogged about peoples' responses (often justifications) for Microsoft's practice - with his own analysis, which could be boiled down to "sure, Microsoft might move if the Washington State attorney applies this. But it might not." (He's more eloquent though.)
Of course, the directors of a company have a responsibility to shareholders to organise their business in the most tax-efficient way possible while remaining inside the law.
The queWhere is Microsoft based? Redmond in Washington State, you might say. Except that when... more
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