by Bill McKibben
Tim Dickinson is out with a superb piece of reporting in Rolling Stone today–a long investigation that picks up where yesterday’s headlines about Burger King and Tim Horton’s (and last month’s about Walgreens) left off. It turns out that these corporate “inversions” are huge business, and part of a trend that dates back at least to the Clinton administration where corporations have bent tax law to make sure their profits stay overseas and beyond the reach of the IRS. The numbers are staggering:
More than $2 trillion in U.S.-based multinational profits currently sit in offshore accounts, representing, by credible estimates, in excess of $500 billion in unpaid taxes. If that money were deposited in federal coffers tomorrow, it would wipe out the deficit for 2014. And every year that Congress dithers on a crackdown, America is forfeiting an approximate $90 billion in revenue.
The offshoring is a complete fiction. The money often comes from US sales, and even though it’s technically in Lichtenstein or the Jersey Islands or Ireland,
these untaxed profits are not stranded. “There’s this false notion that these funds are locked in a strongbox somewhere,” says Edward Kleinbard, a former chief of staff for Congress’ Joint Committee on Taxation. In reality, these untaxed foreign profits are often banked, by the offshore subsidiaries themselves, in Manhattan – where they’re used to invest in stocks and U.S. Treasury bonds. “The money,” says Kleinbard, “is already back in the U.S. economy.”
It’s worth reading the entire piece, especially for the unsurprising but infuriating denouement: lawmakers, even the ones rhetorically at odds with these practices (i.e., Democrats) are actually facilitating the whole process. This is the kind of comprehensive reporting we see too little of.