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Friday, August 15, 2008
The Greater of Two Evils
I posted on Tuesday this week about a new report from the Government Accountability Office that shows a significant number of corporations are playing fast and loose with their U.S. tax liabilities. Giving further evidence that the BudgetBlog is where it is at, I got a call from a reporter (Carolyn Said) at the San Francisco Chronicle within ten minutes of posting my blog. She was working on a story about the GAO report. I was quoted in her well-written story (see Most U.S. firms paid no taxes over 7-year span) as were many other fine analysts and experts.
One quote in particular was from William Ahern, spokesman for The Tax Foundation, a Washington, DC nonpartisan tax research group with a conservative perspective on taxes. Mr. Ahern said that there was nothing wrong with corporations employing armies of accountants and lawyers to exploit every possible tax loophole. Specifically, he said:
In that respect, they are just like individuals. Don't we all fill out our tax returns as aggressively as we know how and take every deduction and credit we're entitled to, even if they're unprincipled, even if they're in the tax code only because Congress thinks we will appreciate them for subsidizing us?
Now my disagreements with some of the perspectives of the fine folks at The Tax Foundation aside, I couldn't agree with Mr. Ahern more when he says corporations can behave just as illegally opportunistically as individuals. In fact, sometimes they work together. Case in point is an AP story that also appeared in the San Fran Chronicle a few weeks ago (mea culpa from the Budget Brigade for missing this story). Seems the U.S. Senate Permanent Subcommittee on Investigations issued a report in July identifying two European banks of assisting wealthy Americans evade U.S. taxes. The two banks, UBS of Switzerland and LGT of Liechtenstein, are part of a larger infrastructure that "aggressively" evades U.S. tax laws, either by exploiting loopholes or just by outright cheating - to the tune of $100 billion annually. Yup, that's $100,000,000,000 each year!
The gut-wrenching horror of this entire situation is that we don't need to figure out whether individuals or corporations are to blame. They both are! These banks are exploiting excessively secretive international finance laws, "aggressively" recruiting wealthy Americans to go to pretty much any lengths to intentionally break U.S. tax laws, and our fellow citizens are going along with it. Patriotism just isn't what it used to be. (btw, you can read the subcommittee report, see documents from a subcommittee hearing on the issue, and even watch archived footage (real player format) of the hearing.)
In case that hasn't made you lose your appetite completely, this will. Ellen Miller at the Sunlight Foundation points us to a Washington Post story from last week that details the large increase in political contributions from UBS's PAC and top executives, and other key figures of the Senate investigation, during the 2008 election cycle. Ellen Miller:
The Post article states that officials with the banks have given more than $2 million this year, $98,000 in June alone, to congressional and presidential campaigns. USB spends close to $1 million a year on lobbying and is traditionally a big campaign giver. But so far this cycle the Swiss bank's contributions have surpassed what it gave in the whole 2006 election cycle. The Post quotes a bank spokesperson as saying the bank's giving is in no way related to the Senate investigation. The article didn't say, however, whether it was said with a straight face.
No, thanks. No dessert for me. I'm full.
Posted by Adam Hughes
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