According to ABC News Friday evening, reporting on research by Bloomberg writer
Jesse Drucker, Google, Microsoft and other corporations are using a financial strategy called the “Dutch sandwich” to legally avoid corporate taxes in the United States. ABC News said that the practice, also called “income shifting”, amounts to the diversion of at least $60 Billion a year from the tax coffers of the U.S. government. They also said that it was all legal and that Congress was “aware of the practice.”
OK, this is high finance and I’m just a dumb old engineer, but I have some questions:
1. Even though Google is a multinational company it was founded and headquartered in the USA. Didn’t it thereby incur at least some moral obligation to their home country? Or, at least for the 28% or so of their income derived here? According to writer David Callahan,
The U.S. National Science Foundation funded the mid-1990s research at Stanford University that helped lead to Google’s creation. Taxpayers also paid for a scholarship for the company’s cofounder, Sergey Brin, while he worked on that research.
Drucker might have also mentioned the federal government’s role in helping to create the Internet in the first place. Or all the other kinds of government spending that turned Silicon Valley into a scientific powerhouse starting in the 1960s.
2. If, according to the Supreme Court in Citizens United v. FEC, corporations have the same first-amendment rights as people, shouldn’t they have similar tax obligations too?
3. If some might object to the above objection as double taxation, would not the Citizens United be double election influence by the same token?
4. Considering that a disproportionate share of profits of such large companies go to compensate top management, couldn’t this Dutch Sandwich be considered an indirect “tax avoidance” by them as well?
I sure wish someone would explain the logic of this to me. And, by the way, if teachers cost $50,000 a year to hire, counting benefits, wouldn’t that $60 Billion hire 120,000 teachers? I’m just asking. I’m just a simple voter but I can do arithmetic.
P.S. You know, the Tea Party just might be on to something after all. You know, about those Congress persons of both parties.