corporate chickens
December 3, 2002 8:45 AM   Subscribe

some strong words about "corporate chickens" thoughts about giving government contracts to companies that have bolted offshore to tax havens - and who might have slipped this defeat of the wellstone amendment into the "homeland security bill"?
posted by specialk420 (34 comments total)
Uh oh. Another unenlightening FPP. Stomp, mathowie, stomp!
posted by RylandDotNet at 8:55 AM on December 3, 2002

What?! Republicans love America!
posted by four panels at 8:58 AM on December 3, 2002

i hadn't heard this before, but it hardly surprises me. deep down in that bill there is probably a clause dismantling the republic and annointing dubya king shrub the first.
posted by quonsar at 8:59 AM on December 3, 2002

unenlightening? - ? - huffington, being a conservative or some sort of a mutation of a conservative - seems like claims of partisanship in the FPP would be moot.
posted by specialk420 at 9:09 AM on December 3, 2002

Posting an op-ed from a commonly read internet magazine is NOT enlightening, no matter what your political slant.
posted by Pollomacho at 9:22 AM on December 3, 2002

Fucking government. I don't even read the goddamn papers anymore, I get so depressed. And there's NOTHING we can do. I've written so many goddamn letters to congresspeople and all I get back is drivel about how "important my view is to them" and then they still go suck the dick of big money and George W.

Where is the anger! Where are the protests? Why don't Americans CARE that this crap is going on? What can we do?
posted by aacheson at 9:22 AM on December 3, 2002

From my understanding, the part of the bill that was removed wanted to ban all federal contracts to companies who have offshore accounts without a legitimate time for the company to withdrawal those accounts. I myself say if you put your assets in an account in another country you should not be completely given all the same protections as if your assests existed in the US. This is all a tricky topic of course, allot of businesses are soaked by the American tax system so creating corporation offshore accounts become an alternative, the practice shouldn't be illegal unless of course you don't believe in economic freedom and that the state owns all aspects of your assets. Tons of European businesses do the same by putting their assests with in American to avoid being soaked by the EU's regulations.

"When we have a tax code that allows companies to cut their taxes on their U.S. business by nominally moving their headquarters offshore, then we need to do something to fix the tax code," O'Neill said in May. -- Paul O'Neill
posted by ZupanGOD at 9:28 AM on December 3, 2002

Dear Mr. Pollomacho: when I come across an artile posted here that I have previously read, then I often turn to the comments to check out their evaluation against mine. That a number of people have read something "commonly" does not make it not appropriate for those not having read it. Read and if you do not like a post, move on.
posted by Postroad at 9:29 AM on December 3, 2002

seems to me the "tax code" issues should have been addressed openly - not slipped in at midnight, without a sole who will claim responsibility for the addition - as an unwanted appendix to a bill that was guaranteed passage. this is the kind of BS that causes cynicism with our political system and i believe part of what huffington is addressing. right on postroad.
posted by specialk420 at 9:39 AM on December 3, 2002

specialk420, I'm not claiming that any of my posts are especially enlightening, I'm just pointing out that a thread I posted, that is similar to this thread, got deleted. If that one gets stomped, this one should, too. I don't particularly want this thread to be deleted on its merits, I liked the article and I think some kind of intelligent debate can ensue, but fair is fair.

Stomp, mathowie, stomp!
posted by RylandDotNet at 10:08 AM on December 3, 2002

Yeah, lets kill this post before anybody can discuss it.
After all, this is all over the news, and the people have already taken to the streets to oppose it.
I would hate to see this kind of thing compete for space on the front page with a neat-o flash game, or the website of a cute dog who has some crazy costumes.
posted by 2sheets at 10:11 AM on December 3, 2002

Interesting topic, but not a very good article - what she never explained, and what I'd like to know more about, is the justification for including the tax-have-rule evisceration in the Homeland Security Act. I mean, a lot of those corporate-friendly provisions - such as limiting drug-makers' liability - at least have rationalizations. What's the story on this? Does anyone know? How is it possibly a benefit to our national security?
posted by risenc at 10:12 AM on December 3, 2002

what I'd like to know more about, is the justification for including the tax-have-rule evisceration in the Homeland Security Act.

We may never know the "real" reason (if any), but it seems likely that the justification is that they wanted to attach the tax haven thing to a bill they were pretty sure was going to go through, simple as that. Unfortunately, riders on bills don't have to actually be related to the main topic of the bill itself, as far as I know.
posted by RylandDotNet at 10:18 AM on December 3, 2002

Here's another link to the subject with a bit more background and it's not an opinion piece. This is a very important subject and deserves attention. Why should I pay corporate welfare taxes and allow corporations to consume my other tax dollars intended for defense with no consequences? Besides, my 401k likes US based companies since offshore also equals evading liability, not just taxes.

Tax Evaders
posted by nofundy at 10:24 AM on December 3, 2002

yo ryland. apologies. i wish i had caught your thread - promises were made at vote time that some of these last minute - backroom - amendments were going to be reviewed prior to signing .... one wonders if these promises will be kept?
posted by specialk420 at 10:33 AM on December 3, 2002

If companies want to use offshore accounts to avoid taxes, and compete globally that's fine with me(which is their excuse for doing this),but they should forgo the benefits that they get from doing business in this country.

"Why shouldn't the American people take half my money from me? I took all of it from them."

Edward Albert Filene(you know the clothing store guy) (1869-1937)

Printing the very dollar bills with which people trade.
Public roads.
Rural electrification.
Government subsidized telephone wiring.
Satellite communications.
Police protection.
Military protection.
A criminal justice system.
Fire protection.
Paramedic protection.
An educated workforce.
An immunized workforce.
Protection against plagues by the Centers for Disease Control.
Public-funded business loans, foreclosure loans and subsidies.
Protection from business fraud and unfair business practices.
The protection of intellectual property through patents and copyrights.
Student loans.
Government funded research and development.
National Academy of Sciences.
Economic data collected and analyzed by the Bureau of Economic Analysis.
Prevention of depressions by Keynesian policies at the Fed (successful for six decades now).
Dollars protected from inflation by the Fed.
Federal Emergency Management Agency.
Public libraries.
Cooperative Extension Service (vital for agriculture)
National Biological Service.
National Weather Service
Public job training.
posted by jbou at 10:37 AM on December 3, 2002

aacheson, from the little I know, here might be a few answers for your questions: AFSC, and Progressive Secretary (easier letter writing). I could have sworn there was a MeFi link to the last one, but I can't find it.
posted by win_k at 10:38 AM on December 3, 2002

what I'd like to know more about, is the justification for including the tax-have-rule evisceration in the Homeland Security Act.

Three words: quid pro quo.
posted by themikeb at 10:39 AM on December 3, 2002

This is especially infuriating when the government is contemplating a very expensive war which these companies don't seem to want to help pay for.

"Informal estimates by congressional staff and Washington think tanks of the costs of an invasion of Iraq and a postwar occupation of the country have been in the range of $100 billion to $200 billion. If the fighting is protracted, and Iraqi President Saddam Hussein blows up his country's oil fields, most economists believe the indirect costs of the war could be much greater, reverberating through the U.S. economy for many years."
posted by homunculus at 10:58 AM on December 3, 2002

Dear Postroad: I have no problem with the article, I liked it when I read it before on the Salon site, I'm sure that there is a lively discussion going on there in the Salon political forums, of course, THIS is not a Salon political forum, a political forum at all nor even a discussion site, so please don't attack me personally, especially when your ONLY contribution to this thread was to do so. By the way, 140 million hits a month makes a site pretty damn common.
posted by Pollomacho at 11:12 AM on December 3, 2002

what I'd like to know more about, is the justification for including the tax-have-rule evisceration in the Homeland Security Act.

It was pork, pure and simple, for companies like Cheney's Halliburton which has many off-shore subsidiaries and wins lots of government contracts. By attaching pork as a rider to a popular bill like Homeland Security they can blackmail opponents. For example, Senator Max Cleland (who incidentally lost two legs and an arm in Vietnam) was branded a Homeland traitor by his draft dodging opponent for fighting some of the worst provisions of the bill and lost his bid for re-election in November.

Here's how this loophole works. A company reincorporates in an off-shore tax haven like the Cayman Islands. All this involves is a P.O. box and a bank account. The actual headquarters in the U.S. doesn't change. Normally a U.S. company has to pay taxes on profits earned both from domestic and international operations. By moving off-shore, they only have to pay U.S. taxes on their U.S. operations and their international profits are tax free.

But wait, there's more. Those remaining U.S. taxes are still annoying so they start buying their pencils from their off-shore "headquarters" for $500 a piece until they have no more U.S. profits. In this manner they legally transfer millions of dollars of profits from their U.S. operation to their off-shore operation. No more U.S. taxes. Pretty sweet, huh?
posted by JackFlash at 11:17 AM on December 3, 2002

Where is the anger! Where are the protests? Why don't Americans CARE that this crap is going on? What can we do?

They're too busy watching the Sopranos and Monday Night Football. :) Oh yeah, and they don't read either.
posted by GrooveJedi at 11:57 AM on December 3, 2002

I find the attitudes here quite interesting ... Huffington sums them up:

"The IRS estimates that corporate émigrés are depriving the U.S. Treasury of around $70 billion a year."

This is good - both she, and a lot of the posters here, simply assume that they (for some reason), simply by virtue of being US citizens, have ownership of corporations ... i.e., it is assumed that they "owe" the Treasury "$70 billion", and if they don't want to pay it, they are somehow "depriving" the Treasury of money that is theirs.

A lot of the companies talked about (e.g., Accenture) have significant business in many countries. (I happen to know a lot about Accenture, they operate in 40+ countries). They don't see themselves as "American" companies, they see themselves as global companies. It is also worth noting here that there are many kinds of taxes companies pay - and it is only a few that are even affected by incorporating offshore. (For instance, if Accenture does get a piece of the integration work required by the Homeland Security project, it will be paying the employer's share of payroll, FICA, and other such taxes, as well as city taxes, state taxes, and some federal taxes. And depending upon the country, their operations around the world pay similar local taxes for work they do in those countries.

To incoprorate offshore has to do with taxes that are layered on top of those local taxes, and have to do with total corporate earnings. So if Accenture as a corporation is highly profitable, even if a good deal of the profits came from work in Germany, or India, or a dozen other countries ... why the hell should Americans feel as though they have some sort of "right" to those earnings? And if they do, why doesn't Germany, and India, and France, and Singapore, and Taiwan, and Great Britan also have the "right" to the same thing?

If the Accenture's German operations take a risk, develop a practice, make the practice profitable by using German workers to accomplish work in Germany, why the hell should an American believe they have any "right" to tax a portion of those profits? The only taxes being "avoided" are those this country never had a right to in the first place.

We are, of course, living in modern times, in which no one feels like they need to justify a "right", they simply need to assert that they have it, decide what "fair share" a company or individual should pay, and then go on and on about how unfair and selfish people are being when they "dodge" payment of their "fair share". Thus, a global company searching the world for the most advantageous place to put corporate headquarters is exploiting a "loophole" .... thus "depriving" the US Government of "$70 billion".

Oh yes, and by the way, while Huffington may self-identify as a "conservative", in conservatives circles she is considered a total fruitcake, and certainly not someone that speaks for the larger perspective.
posted by MidasMulligan at 12:33 PM on December 3, 2002

Midas, if a company has their home offices in the US then they are a US company, also if they are trying to hide from taxes that they should pay from goods or services they sold in this country then they are wrong. Companies benefit from having a stable place to do business, and they should pay to play. Also Huffington bailed on the conservatives years ago, she now considers herself a liberal.
posted by jbou at 12:41 PM on December 3, 2002

Midas- interesting points. I wonder why the advocates for the provision's reversal didn't feel they could make that case openly? Or why leaders such as Bush reversed themselves after the election was over and the heat was off?

It's not so much a question of "rights" (although I know you dearly love humping that particular piece of furniture) as it is corporate entitlement. U.S. Corporations which flee a tax system which is already swiss-cheesed with loopholes simply do not deserve consideration for public contracts. On the other hand, corporations which are good corporate citizens, which stay in this country, and which pay their share of taxes have earned that consideration.
posted by Ty Webb at 1:17 PM on December 3, 2002

Midas, if a company has their home offices in the US then they are a US company ...

That's not the legal definition of "US Company". Business has changed dramatically in the last couple decades. Countries used to be able to hold business hostage. In tax debates, the only really issue was whether taxing businesses more or less would help or hurt the economy (supply-side vs. demand-side economics). It was always just assumed the countries could do whatever the hell they wanted, and companies would have no choice other than to simply pay. Unions got away with the same thing. The attitude all around was to attempt to get everything possible out of corporations - until the point was reached where competitiveness itself was threatened (of course, when the goose laying the golden egg appears to be dying, unions then "grant concessions", and governments then give tax "breaks").

The tech revolution happened, however, and that has changed everything. "Headquarters" simply doesn't have the same meaning anymore, and has much more to do with virtual space than physical space. Until I left early this year to start my own business, I worked for a multinational "headquartered" in New York, and I probably actually went into my offices once a week. The vast majority of business is now done via phone and email. I incorporated my own business in Delaware, but in the first year, most of my actual contracts are in Europe and Asia (in fact, none yet in the US). however, I certainly am paying the US a not insignificant amount of taxes ... so naturally I'm certainly considering incorporation elsewhere. Global business identifies itself with its clients, not with countries. Governments, however, still operate as though they own companies, and have the complete right to decide what to take, and what to "let" them keep.

They don't.
posted by MidasMulligan at 1:20 PM on December 3, 2002

They don't see themselves as "American" companies, they see themselves as global companies.

I hear the Moon's nice this time of year, Midas. Perhaps you and Accenture should consider relocating.
posted by octobersurprise at 1:22 PM on December 3, 2002

Countries used to be able to hold business hostage...The attitude all around was to attempt to get everything possible out of corporations - until the point was reached where competitiveness itself was threatened (of course, when the goose laying the golden egg appears to be dying, unions then "grant concessions", and governments then give tax "breaks").

O Jesus, that's about some of the most disingenuous horseshit I've ever seen on MeFi. Corporations held hostage, all powerful unions, cats and dogs living together. Spare me.

As a business owner you are, of course, free to incorporate outside of the U.S. whenever you want. You just then won't merit the same consideration for public contracts as other, better corporate citizens.
posted by Ty Webb at 1:30 PM on December 3, 2002

aacheson: get out and canvas for a candidate you believe in. Do it through the state pary, or through another organization, but do it. It's the most effective way to get votes and get things changed that there is.
posted by Yelling At Nothing at 2:26 PM on December 3, 2002

Global business identifies itself with its clients, not with countries.

Ah, which must explain why all of these businesses don't ever play the patriotism card, especially not in the USA, and especially not after 9/11. But I think Ty Webb's 'disingenuous horseshit' sums up my feelings towards your plight succinctly. Boo-fucking-hoo.

If you want a contract that's paid with public money by an agency designed to protect domestic security, is it too much to ask that you have your registered office in the self-same country? Or are you happy with the Halliburton way, playing corporate mercenary when a country is just another client?

If you want to operate under a flag of convenience in some little Caribbean hotspot, then fine and dandy; go and share a dead-letterbox with the organised criminals and drug dealers. But don't try and claim some kind of haughty moral justification for emulating the banking and accounting practices of Al-Qaeda.
posted by riviera at 2:43 PM on December 3, 2002

This is yet another good reason to replace income taxation with transaction taxation. Under a transaction tax (GST) regime it doesn't matter where or how you earned your money, if you spend any (or withdraw any from a bank account, which is the easiest way to implement the collection system), you pay tax. It's perfectly fair; people and corporations are exactly as wealthy as the money they spend. Saving gets rewarded. No hassles with tax returns and all the attendant issues like auditing, prosecutions, etc. No issues with flags of convenience and where money was earned, etc etc. A corporation, or person, is only as "in the USA" as its money is spent in the USA. Buy real estate or physical objects in America, pay an American transaction tax. Pay American staff, pay American tax, and the staff will pay again themselves when they personally spend money in the USA.

Incidentally, I can see a reasonable justification for letting corporations go completely tax-free, incorporate off-shore, whatever. It's in the circularity of money. Money is as useful to a corporation as fuel is to a car: not at all, in itself. It has no needs and desires. People's wants drive it where it goes. A corporation incurs expenses which are paid to individual people. This includes salaries, allocations, dividends, contractors fees, etc etc. These people in turn should pay tax. Of course this kind of view necessitates some improvements to the personal tax system, for example getting rid of the concept of incorporation as an individual and buying all of one's personal needs through one's company, and suchlike dodges, which I'm sure Midas can tell us all about :). It could even be made reasonably fair, but this would involve taxing wealthy individuals a great deal more than they presently are. And of course it has to stop somewhere, because the exact same reasoning works for any participant in the tax system; why should I as an individual pay tax, when the people I pay my money to are paying tax? And back we go to the transaction tax argument. :)
posted by aeschenkarnos at 5:41 PM on December 3, 2002

Hmm. GST is not the same as transaction tax, I started writing about GST and changed my mind to the purer, simpler option partway through. My bad.
posted by aeschenkarnos at 5:43 PM on December 3, 2002

aeschenkarnos, are you speaking of the consumption tax?

ie: HR. 2525?
posted by ZupanGOD at 7:16 PM on December 3, 2002

ZupanGOD: Hmm, HR2525 was a new one on me, I don't see all the American news, but I found a link to a site about it. Having read this FAQ I think it's on the right track, but I see two major problems with it: firstly, a huge amount of stuffing about with exemptions and rebates and so on which creates bureacratic overhead and a potential for fraud and error; and secondly I think tax collection through all businesses is an inherently bad idea for many reasons, not least being fraud and error again.

All businesses (and consumers) of any financial importance use banks, which is why I think making the banks the collection point, and taxing all transactions rather than just sales of goods and services, would work more efficiently. Banks are probably the most easily auditable form of business in existence, with the best-kept financial records. The whole point of a bank is keeping financial records.

These kind of taxes also catch the 'black market', businesses which work on a cash-only basis and whose operators declare no tax anyway. Drug dealing is one obvious (and large and common) example, but home brewing, furniture and craft sales, cash-in-hand handywork, etc are usually black market businesses too. Income tax has the fatal flaw of requiring taxpayers to actively pursue the process of paying tax, calculate their tax liability, send in forms, etc etc. As such it is vulnerable to dishonesty, laziness, and innocent mistakes.
posted by aeschenkarnos at 9:32 PM on December 3, 2002

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