AUSTIN, Texas -- In response to President George W. Bush's call
to all Americans to give service to our country, some are enlisting in the
Peace Corps, AmeriCorps, Senior Corps or the armed services. Others have
begun putting in their suggested 4,000 hours at a variety of charitable
endeavors, through everything from the volunteer fire department to
mentoring programs. And still other Americans are moving their companies to
Bermuda and the Cayman Islands to avoid paying taxes. Isn't that special?
The New York Times reports a "megatrend" among American
companies to incorporate in Bermuda in order to sharply reduce their taxes.
Assorted financial advisers are encouraging these "moves," which involve
nothing more than setting up a mail drop and paying a few fees. It's not
necessary to have an office or to hold meetings there. One tax partner with
Ernst & Young did cite patriotism as "the only potentially troubling issue,"
according to the Times, but concluded that profits trump patriotism. "We are
working through a lot of companies who feel that it is (the right time to
move offshore), that just the improvement on earnings is powerful enough
that maybe the patriotism issue needs to take a back seat to that," said the
partner's memo quoted in the Times.
Just a few years ago, Americans were quite famous for paying
their taxes: no one has ever paid taxes happily, but they were regarded as
one of life's inevitabilities, famously in the same category as death. But
we seem to be entering a "taxes are for suckers" era: Perhaps we should call
it the Leona Helmsley Movement after the hotelier who observed, "Only little
people pay taxes."
A recent report by the Internal Revenue Service says the number
of Americans with million-dollar incomes more than doubled from 1995 through
1999, but the percentage of their income that went to federal income taxes
fell by 11 percent because of capital gains tax cuts. The same study shows
that the incomes of Americans who make less than a million grew as well,
though only slightly, and the share of their incomes that went to taxes also
rose slightly. Think there's a connection? These numbers will become even
more disproportionate when the Bush tax cuts for the rich kick in.
Republicans advocating tax cuts for the rich and corporations
often say that they pay a bigger share of the income tax tab than the rest
of us. That's because A) they have much more money, and B) their reasoning
does not include payroll taxes. Citizens for Tax Justice reports that
payroll taxes are the largest federal tax for three out of four taxpayers.
It's like saying, "Rich folks pay more than you do, if we don't count most
of what you pay."
So, why would a corporation bother to set up a shell company
offshore in order to avoid taxes, since many of them, like Enron, pay zero
taxes now? Enron paid no taxes in four of the past five years, yet was due
to get a $254 million tax rebate from the U.S. government under President
Bush's ridiculous economic stimulus package, now fortunately defunct. The
company paid $17 million in taxes in 1997, but during the four years it paid
nothing, it also got a total of $381 million in tax rebates by using more
than 874 offshore accounts.
The Times reports the Stanley Works company of Connecticut is
saving $30 million a year by moving offshore; Tyco international of New
Hampshire's move helped them dodge more than $400 million in taxes last
year. Ingersoll-Rand pays $27,653 a year to maintain a mail drop in Bermuda,
which allows the company to avoid at least $40 million a year in taxes. You
can see why this is a megatrend.
The Catch-22 is that the rest of us get stuck with making up for
the missing money. We're in a fiscal mess now -- the federal budget's back
in the red, we're raiding Social Security, the R's have a hissy fit whenever
anyone suggests rolling back last spring's tax cuts, which, of course,
benefit the rich more than everybody else to a staggering extent -- a
whopping 38 percent to the richest 1 percent of Americans.
A new Zogby poll shows voters overwhelmingly support a rollback
if it means more money for government programs like education, prescription
drugs, environmental protection, deficit reduction and so forth. Imagine how
much worse it will get when every corporation in America has moved offshore
to avoid taxes. Then there will be nobody here to pay taxes but us chickens.
Mother Jones magazine reported two years ago on how easy it is
to set up an offshore shell company. "It's fast and cheap. All that's
required is filling out a one-page form and providing a photocopy of my
passport and driver's license. The entire incorporation process -- which
costs $1,000 plus $750 in annual renewable fees of $750 -- can be completed
within 48 hours." I predict this process will be available on the Web any
minute now, you won't even have to go to Bermuda or the Caymans to do it,
and then nobody will have to pay taxes. Won't it be great?
And if you think there's no connection between the tax laws that
permit this thievery and big campaign contributions to politicians, I know
some people who'd like to sell you their Enron stock.
To find out more about Molly Ivins and read features by other
Creators Syndicate writers and cartoonists, visit the Creators Syndicate web
page at
www.creators.com.
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