Thomas Donlan ends his latest Barron’s column with the following observation about companies that structure their operations in ways that minimize corporate income taxes.
Most large businesses won’t pick up all their toys and abandon an inhospitable jurisdiction. But they do rearrange their affairs to put more of their profits out of reach of the most grasping tax authorities.
Jack Ciesielski, proprietor of The Analyst’s Accounting Observer, has combed through documents filed by the Standard & Poor’s 500 companies to estimate the money they park overseas to avoid U.S. taxation.
Most of the companies don’t make adequate disclosures of their tax-playing; Ciesielski takes what they do disclose in 10-K annual reports and uses them to make estimates. He pegs the 500 companies’ untaxed foreign earnings over the five years from 2008 through 2012 at $934.8 billion. They’ve accumulated $1.8 trillion since 1959. …
… Another way to look at the problem is to see untaxed foreign earnings as a promising harbinger of a corporate tax revolt. Just as contemporary Americans admire the Boston Tea Partiers of 1773 and their revolt against the British tea-taxers, they should cheer for the corporate-tax rebels.
Any tax revolt should have as a goal the complete elimination of the corporate income tax, which raises prices for consumers, hurts shareholders, rewards borrowers, drives jobs offshore, and requires the unproductive employment of a legion of accountants, lawyers, and financiers.
Too many Americans imagine that a corporate tax is an alternative to a tax paid by citizens. In fact it is paid by citizens, indirectly and invisibly. If we ever intend to pay for all the government we have, we must stop pretending that somebody else will do the paying.
