The article below is from SignOnSanDiego.com, and is the best exposure I’ve seen on the corrupted corporate tax structure in the United States. Instead of editing it, I’ve copied the entire article, and highlighted and bolded the best points. My point is, here are experts in their fields, quoted in a San Diego Union-Tribune website, agreeing with President Obama’s goal of restructuring the corporate tax policy so it is fair, finally. As you will read, we are losing from $60 billion to $100 billion a year in corporate income taxes, and guess who has to make that up?
See this link, too, on the Ugland House in Cayman Islands, ‘official’ headquarters to over 9,000 US corporations, including Intel, Atria, Exxon, and Coca Cola, allowing them to reduce their US income tax liability to a fraction of what it should be.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aWoQkk2WY1oc
EconoMeter: Should loopholes favoring lower corporate taxes be eliminated?
BY ROGER SHOWLEY ORIGINALLY PUBLISHED JANUARY 29, 2011 AT 6:44 P.M., UPDATED JANUARY 29, 2011 AT 5:23 P.M.
In his State of the Union address, President Obama covered much, including many ideas about federal spending priorities and the nation’s economic future. One idea was recommended by his deficit reduction commission last year and dealt with corporate tax rates and loopholes.
Q: Do you support President Obama’s idea to eliminate corporate income tax loopholes and reduce the overall income tax rate assessed against companies? What is your favorite loophole – and one that could generate a lot of revenue -- that should be eliminated?
Marney Cox, San Diego Association of Governments
NO
But don’t get me wrong, I’m against all loopholes; the principles of sound tax policy dictate that tax laws should not favor one economic activity over another. The goal should be to lower tax rates, removing the distortions in the present system, allowing businesses to compete on the basis of performance and return rather than on their ability to receive or keep special provisions in the tax code. Some of the biggest loopholes today are offered to companies in the energy field, no not oil companies, those that produce energy from renewable “green” sources. President Obama is not going to level the playing field and let the market rather than the tax system drive investment.
Kelly Cunningham, National University System
YES
The current top corporate tax rate in the U.S. is among the highest in the industrialized world, yet federal tax laws are filled with so many credits, deductions and exemptions, few companies ever pay the top rate. Most businesses should pay lower taxes, and thus stimulate more businesses to employ more workers and pay taxes. Simplifying tax codes also encourages sounder business decisions, while eliminating loopholes effectively raises net revenue to the Treasury. The litany of corporate loopholes is extensive, but the principle of the market determining costs and success is vastly preferable to government picking winners and losers.
Alan Gin, University of San Diego
YES
The U.S. statutory corporate tax rate of 35 percent is among the highest in the world. But when tax loopholes are factored in, the effective tax rate drops significantly. The problem is that the tax burden is uneven, with some companies benefitting from the loopholes and paying little to no taxes, while others have to pay the full rate. One area to look at is transfer-pricing arrangements that allow companies to shift income to subsidiaries in overseas tax havens and avoid taxes in the U.S. One estimate is that closing loopholes involving overseas tax havens could bring in an extra $100 billion dollars a year in tax revenue.
James Hamilton, University of California San Diego
YES
But I’ll believe it when I see it. Today’s “loophole” is yesterday’s “tax incentive.” Congress has never been able to resist the urge to decide that certain goals are useful and need to be encouraged, even if we all understand as a general principle that it makes more sense to let private firms decide which projects have the highest potential returns. If we’re serious about doing something about this, the place I’d like to see us start is the enormous tax breaks and subsidies for ethanol. These have made very little if any positive contribution to our net energy supplies, and have significantly increased the cost of food not just to Americans but also to consumers around the world.
Gary London, The London Group
YES
Particularly in those cases of corporations that are highly profitable. There is no inherent benefit to U.S. taxpayers to subsidize them with tax breaks. In fact, what they don’t pay, presumably the rest of us have to make up. The President cited Exxon, which earned a record $45.2 billion profit, none of it domestically taxed. Google, General Electric, and Facebook (their reported intention this year) send earnings from Ireland to the Cayman Islands, through a perfectly legal loophole called “transfer pricing,” paper transactions among corporate subsidiaries that allow for allocating income to tax havens while attributing expenses to higher-tax countries. Such income shifting costs the U.S. government as much as $60 billion in annual revenue. That is hard to ignore.
Norm Miller, CoStar Group
YES
The tactics of firms like Google and Facebook and many others depend on shifting income to lower tax rate countries like Ireland or the Cayman Islands by paying rent on things like the use of logos and other intellectual property. They deduct the expense in the high tax-rate country like the U.S. and claim the income in the low tax-rate country. The key to eliminating this behavior starts with lowering corporate taxes overall from 35% to say 25% and then eliminating the games. Doing so would provide $50 to $60 billion in revenue which would pay off .4% of the outstanding U.S. debt balance each year. It’s a start.
Lynn Reaser, Point Loma Nazarene University
Yes
The U.S. corporate tax rate is one of the highest in the world but generates one of the lowest revenue totals relative to GDP because of the myriad of tax incentives. To improve U.S. competitiveness: (1) The corporate tax structure should be collapsed from multiple brackets, with the top taxed at 35%, to one bracket taxed at 28%; and (2) All of the more than 30 tax credits and over 75 tax exclusions, deductions, and deferrals known as “tax expenditures” should be eliminated. This approach could mitigate the backlash if tax preferences were retained for one industry but not another. A level playing field without the distortion of various tax subsidies, combined with a lower overall tax rate, would enhance both the efficiency and equity of the U.S. economy.
Dan Seiver, San Diego State University
YES
The U.S. corporate tax rate is too high compared to many other developed countries, and there are too many loopholes that allow corporations to avoid paying taxes. If we simplify the corporate tax code, and eliminate loopholes, we can certainly reduce the statutory rate, and probably will not lose any tax revenue! The worst loophole is the one that allows U.S. firms to list their main or subsidiary “headquarters” as the Cayman Islands, which has no corporate tax rate. Many large American firms have used this loophole, including Altria, Coke and Intel. Don’t believe me? Google “Ugland House Bloomberg” and read the May 2009 story for yourself. Over 18,000 corporations list this 5-story building in the Cayman Islands as their official address. Close this loophole!
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