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Taxation | ||
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Burgess COMMENTARY Peter Burgess | ||
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Original article:
https://www.fastcompany.com/90636996/taxation-isnt-theft-but-avoiding-taxes-is
Taxation isn’t theft, but avoiding taxes is ... How can any small business compete with a large corporation that doesn’t pay a single penny in federal taxes? [Source Photo: tupungato/iStock, UmbertoPantalone/iStock] While most Americans across the nation begin to file their taxes, numerous ultra wealthy corporations await their notice from their tax lawyers telling them that they don’t owe a single penny to the national coffers. With President Biden considering a total rewrite of our corporate tax code to fund overdue infrastructure repairs and investments, he must ax these corporate giveaways and make corporations pay their fair share. You’ve likely seen the headline at least a dozen times now, “X company paid $0 dollars in federal taxes.” This year a report found that upward of 55 major companies like Nike, Salesforce, and FedEx completely avoided paying federal taxes. There are numerous ways in which corporations avoid paying their taxes, but that $0 dollar tax status is often due to companies shifting their profits overseas. Unfortunately, this has become increasingly common in recent years thanks to the 2017 tax cuts passed by the Trump Administration and a Republican congress, which created a giveaway called the territorial tax system, that made shifting profits overseas more profitable than it had ever been before. Although the territorial tax system sounds incredibly complicated and boring—I assure you it’s just boring. Before the 2017 tax code rewrite, corporations were required to pay a chunk of their worldwide profits in U.S. taxes regardless of where they were earned. They received a waiver for the international taxes they paid, and the difference would be their tax rate. After the rewrite, the corporate rate was lowered from 35% to 21%. Instead of paying the 21% rate however, companies now pay a special international rate of 10.5%. This new system essentially gave companies a 50% discount on their taxes and a massive incentive to shift their profits overseas. When you combine the modified territorial tax system with a cadre of other tax breaks, it allows companies to completely avoid paying their federal dues. Corporations now send their profits to places like Ireland and pay some taxes to foreign governments, completely disinvesting in our country, where their profit was originally made. Starbucks, for instance, has been found to transfer money between their parent company and a tax subsidiary in Switzerland. It’s easy to call these tax cheating methods loopholes, but they really aren’t. This is the tax code working exactly as it was intended—to help the uber-wealthy become even richer, while everyone else pays their fair share and remains at the bottom. Dodging taxes is especially egregious when you consider that corporations depend on taxpayer funded services to make a profit. They pay nothing for the roads and bridges their trucks rely on, the public education that their workforce received, and even the sewage system that miraculously whisks away their waste. When they avoid their responsibility to the nation, it’s working folks and small businesses that are left to pick up the check. Taxation isn’t theft, but avoiding taxes is. As a small business owner, it’s not high wages or taxes that reduce my ability to run a successful company. It’s unfair taxation like this that holds me and many of my fellow American’s businesses back. How can any business compete with a large corporation that doesn’t pay a single penny in federal taxes? Unlike large corporations and businesses, I can’t afford to spend millions of dollars on fancy lawyers who transfer money around international borders. Small businesses are an essential part of the American dream and have long been one of the ways immigrants and strivers make a good living and secure a future for their children. But as long as the playing field is skewed in favor of large corporations, the mom and pop shops that make up the backbone of the American economy will face an unfair disadvantage for simply not being wealthy enough. As long as inequities are built into our tax code, I fear for the future of business competition in this country. The Biden administration should enforce a realistic tax burden on these wealthy corporations, restore the old corporate tax rate, and get rid of giveaways like the territorial tax system. It’s high time to fix America’s broken tax system. Stephen Prince is the vice-chair of the Patriotic Millionaires. ----------------------------------------------- You Might Also Like:
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| 05-17-21 7:00 The text being discussed is available at | https://www.fastcompany.com/90636996/taxation-isnt-theft-but-avoiding-taxes-is and |