Currents
May 2016
> continued from page 4
system in many ways, including shifting profits to
overseas tax havens. In 2012, American companies
reported more profit in low-tax Bermuda than in
Japan, China, Germany and France combined, even
though their employees in Bermuda account for less
than one-tenth of 1 percent of their worldwide
totals.
Over all, the share of corporate taxation in federal
revenue has declined since 1952 from 32 percent to
11 percent. In that same period, the portion coming
from payroll taxes, which hit the working poor, has
climbed.
Look, the period of the Oxfam
study included the auto and
banking bailouts, which were
good for America (and the loans
were repaid); it's also true that
the official 35 percent corporate
tax rate in the U.S. is too high,
encouraging dodging strategies.
But we have created perverse
incentives: C.E.O.s have a responsibility to shareholders to make
money, and tax dodging accomplishes that. This isn't individual
crookedness but an entire political/economic system that induces
companies to rip off fellow citizens quite legally.
It's now widely recognized
that corporations have manipulated the tax code. The U.S. Treasury, the World Bank, the International Monetary Fund, the European Union and professional economic journals are all trying to
respond to issues of tax evasion.
Bravo to the Obama administration for cracking down on corporations that try to move abroad
to get out of taxes. Congress
should now pass the Stop Tax
Haven Abuse Act, and it should
stop slashing the I.R.S. budget
(by 17 percent in real terms over
the last six years).
When congressional Republicontinued on page 6 >
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