THE BLOG
01/04/2011 06:46 pm ET | Updated May 25, 2011

Tax Dodgers and Those Who Love Them

Savor the irony. Many of the same folks who called people "draft dodgers" back in the Vietnam War, when we had conscription, are the wannabe "tax dodgers" of today.

Those who speak the loudest about deficit reduction are working the hardest to avert any reasonable attempt to lower federal debt if it infringes on what they'd like to see as their constitutional right to corporate gluttony, a right recently conferred by the Supreme Court in its Citizens v. United ruling.

And, at a time when, according to Reuters, a 60 Minutes/Vanity Fair poll shows that 61% of the American people want to see the trend reversed, and taxes raised on the rich.

Yet, ironically, in mid-December, shortly after the president signed the tax bill, big business leaders, encouraged by extension of the Bush tax cuts, sat down with the White House to request corporations doing business offshore be given a repatriation tax holiday.

As Bloomberg reports, the heads of some of the largest, and most lucrative companies and pharmaceutical conglomerates in the country may well have been inspired by Obama's willingness to prolong Bush's tax cut to the upper 2% of income earners, as well as a 2% payroll tax reduction that begins this month to invite the president to consider their proposal.

Executives from Pfizer, Eli Lily, and Cisco Systems were among those who asked the president to make respectable women of them, so they no longer have to conduct business under the table, so to speak, and instead openly escape paying a 35% tax on offshore profits. This would also mean they would no longer have to hand prestigious, and pricey accounting firms beaucoup bucks to sanitize operations that, even in the best of times, would be considered scandalous.

Yes, big business wants a holiday on hundreds of billions of dollars it owes to the U.S. Treasury at a time when the budget deficit is expanding faster than our waistlines. After all, executives argue, if you support George W. Bush's tax breaks to the rich, why not continue his 2004 holiday on repatriated money which reduced tax obligations by a whopping 30%.

Not surprisingly, the corporate head honchos who met with Obama also argue that to do so would not only bolster their bottom line, but would be the equivalent of a vitamin B shot for the economy. This proposal is not only scandalous, it's audacious. Such unabashed, unapologetic greed in an age of "fiscal austerity" is irony at its finest hour.

When the federal deficit approaches a trillion and a half dollars, how could anyone in their right mind approve legitimizing, and finalizing tax dodging for the most lucrative corporations, ones that make billions of dollars in profit overseas, without letting them give a dime of it to the Treasury?

Arguably, a deficit hawk like Republican Congressman Darrell Issa, now majority leader of the House Oversight Committee, might consider it "wasteful spending" to award what his party likes to call a "stimulus check" to working families in the form of a payroll tax holiday, but "incentivizing" when it comes to providing cuts to the rich, and big business. This is the change voters went to the polls in the 2010 midterm election to elect, a change that excludes the vast majority of them while pandering to corporate profit.

See what happens if you earn $100,000 a year, and owe Uncle Sam $8,000 in federal income taxes. See how long you'll be able to avoid paying it. Well, U.S. corporations have reportedly managed to escape paying as much as $25 billion a year in repatriation taxes, an increase of $7 billion a year since 2003 alone.

No one is suggesting there's a problem with the repatriation tax rate which is a healthy 35%. The only problem is the number of companies, and the mind-boggling amounts of back taxes that are not being paid. If you or I were to do this, it would be called tax evasion.

According to Bloomberg, one company alone, Cisco, hasn't paid any taxes this year on more than $30 billion of profit. That's only one company out of dozens. And, to think that the first "entitlement" program Republicans are looking to cut is Social Security. Social Security, they say, is running out of money. Instead of diverting money from Defense, if the government were to collect even 20% of the 35% these companies owe in repatriation taxes alone, Social Security, and Medicaid would be in good shape for generations to come.

Were the president to agree to this request from big business not only would he be violating a campaign promise he made to work to defeat tax dodging by major corporations, he would also legitimize a practice which has been going on, with impunity and without oversight, for too long. The odds that the new head of the House oversight committee, Darrell Issa, will work with congressional Democrats to right this wrong are zero to none.

The CEO of Cisco who was among those at last month's meeting who wants to see another Bush tax cut, the repatriation tax cut, extended, too. What will big business want next to eliminate the repatriation tax altogether, along with making permanent tax cuts to those at the upper rungs of the income ladder?

The only word for this is Chutzpah. The logic is, now that you've rolled over for the upper 2% of income earners, Mr. President, how about rolling over for us, too?

Don't let the polls fool you. As of Wednesday, there will be even more members of Congress who represent corporate giants, and the wealthiest among us. Savor the irony, yet again, in that it was grassroots groups like the "tea party" who put them there. Strange, no, given that the percentage of tea partiers who belong to the upper 2% club is miniscule, and shrinking.

Well, up until now, Congress hasn't been buying that all big companies have to do is take their business overseas, and with a little accounting sleight of hand, finagle a way to avoid paying billions in taxes. Some, in Congress, have been pressing to close the loopholes for American companies that try to evade paying income taxes by opening up foreign subsidiaries.

All that might change now that the majority leader of the House is a Republican, Darrell Issa, who has the temerity to call President Obama's government "the most corrupt" in history. Ironically, the stimulus plan Issa condemns as wasteful spending, and the idea of a tax holiday for big business, are direct descendants of the Bush administration.

We know how a Democratically-controlled House would respond to letting corporations write off taxes on profits they obtained overseas, but how did a Democratic president respond, and one who inveighed against companies, in effect, making tax shelters out of offshore companies? President Obama handed the proposal for a repatriation tax holiday over to Treasury Secretary, Timothy Geithner, which is like handing raw meat to a hungry lion.

One would expect the U.S. Treasury which faces increasing federal deficits to go after all this lost revenue, but somehow one doesn't expect Timothy Geithner to do that. Is the president playing "good cop, bad cop" here, or is he yet again pandering to the corporate establishment so that the rest of us can be assured the crumbs from their table?

If Mr. Obama and the Democratic Party hope to recover their losses from the midterm election, as well as the trust of the American people, they had better take another lesson from the Vietnam War, and start calling all those companies that are now cheating this country out of hundreds of billions of dollars "tax dodgers" the way those who ran to Canada during the 1960's and 1970's were called "draft dodgers."

The Democrats have the support of most Americans who would like to see this administration cut loose from the leash of big business. Many would like to see that those who can most afford to do so pay their share.

Unless, and until, tax dodging is openly denounced, and an effort is made to recover unpaid funds, the only difference between the election of 2004 and 2008 is four years.