Profits before Patriotism: Corporate Tax Evasion and the Need for International Working-Class Politics

Sandy Boyer

 

Barack Obama has discovered that U.S. multinational corporations behave like just that–multinational. They pledge allegiance to their bottom line, not to the good old U.S.A. Obama and congressional Democrats criticized these corporations for being unpatriotic because they’ve parked more than $2 trillion in profits in other countries where they pay no taxes to the U.S.

It’s called “inversion,” and it works something like this: A U.S. multinational buys a foreign company, moves its headquarters there and proclaims that it’s no longer an American company. All of a sudden, it stops paying U.S. taxes and start saving billions of dollars. And it’s perfectly legal.

Apple has taken inversion to a whole new level. It has set up subsidiaries in Ireland to take in the proceeds from sales outside the U.S., which account for 60 percent of Apple’s profits. The profits channeled through its Irish subsidiaries pay no U.S. taxes. This enabled Apple to save $7.7 billion in 2011 alone, according to figures publicized by the Senate Permanent Subcommittee on Investigations, chaired by Michigan Sen. Carl Levin.

This is possible because Apple has an Irish holding company, with no operations or employees in Ireland at all, at the head of its foreign operations. This holding company doesn’t pay taxes to any government, including the Irish. In fact, it hasn’t paid a penny in taxes for five years. Legally, it doesn’t exist in any country, anywhere in the world.

Obama and other U.S. political leaders are fuming because these tax deals have already cost the U.S. government tens of billions of dollars in revenues, and there’s worse to come.

All this prompted Obama, in a speech at Los Angeles Trade-Technical College in July, to declare that corporations lack “economic patriotism.” He even called them “corporate deserters.”

Obama never mustered this kind of passion when U.S. multinationals shipped jobs overseas so they could pay lower–often starvation–wages. Industries like textile, electronics, garment and shoes that once paid a living wage, have permanently disappeared from this country. Now, high-tech companies are discovering that they can pay computer programmers located in Asian countries a fraction of what they have to pay in the U.S.

The corporate CEOs who are evading U.S. taxes and shipping jobs overseas no doubt think they’re at least as patriotic as Barack Obama. Forbes magazine analyst Mike Patton explained their thinking: “U.S. corporations are holding more than $2 trillion overseas to avoid the U.S. corporate income tax. If these corporations were to repatriate these dollars, they would be forced to pay taxes at a rate of 35 percent, or around $700 billion. If you were the CEO of a large multinational corporation, what would you do?…Remember, with businesses, it’s all about economics.”

Or just suppose for a moment that some kindhearted CEO suddenly decided to pay garment workers everywhere the same $7.25-an-hour federal minimum wage they have to pay in the U.S.–instead of the 24 cents an hour they pay in Bangladesh, the 45 cents an hour they pay in Cambodia, or even the astronomical 52 cents an hour they pay in Pakistan.

That corporation would rapidly go bust, priced out of the market. Long before that, our kindhearted CEO would be out of a job because the company’s stock price would have collapsed.

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As Forbes reminds us, “With businesses, it’s all about economics.” But if the 1 Percent doesn’t sacrifice for the “national interest,” why should the 99 Percent?

We’re the ones who are constantly told to “Buy America,” no matter how much more it costs. We’re told we have to sacrifice our jobs and wages so corporations won’t have to leave the country. These sacrifices may be in somebody’s “national interest,” but all they’ve earned us are fewer jobs, lower wages and even more people going hungry.

Maybe it’s time to try supporting working people in other countries, instead of competing with them. What they need most is help in building strong unions that can win higher wages and decent health and safety conditions. 
Even the money that U.S. unions are currently spending on futile “Buy America” campaigns and never-ending protectionist crusades would go a long way to help union organizing in Asia and Latin America. Any time these workers win, U.S. workers win too, because it becomes harder for the corporations to pit us against each other.

Perhaps the greatest sacrifice working people make for the “national interest” is to fight and die in U.S. wars. Whether it’s Vietnam, Afghanistan or Iraq, it’s been working people who wind up dead and corporations that wind up with the profits. Muhammad Ali knew what he was talking about when he refused to be drafted, saying, “I ain’t got no quarrel with the Viet Cong. No Viet Cong ever called me a ‘nigger’.”

Contrary to what we’re constantly told by the corporate media, U.S. working people have a lot more in common with working people in other countries than we do with American multinational corporations. Or, as the Irish revolutionary and socialist James Connolly wrote, “The capitalist of my own country is my enemy. The socialist of another country is a fellow patriot.”

Originally posted at SocialistWorker.org.

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