Mainstream media did a poor job telling the story about how almost 70% of America's largest multinational corporations paid zero income taxes between 1998 and 2005. You can be certain that the reason that story wasn't widely reported in traditional media is because more than a few of those multi-conglomerate media organizations would be on that list of taxpayer no-shows.
This story wasn't the result of investigative newsgathering. In fact, the story came directly from the Government Accounting Office that conducted audits of more than a thousand U.S.-based multinational corporations.
It is not a complicated story to understand. You can begin to understand how the system works by analyzing this quote by Leona Helmsley; "Only poor people pay taxes."
Helmsley, you might remember, was the unlikable multimillionaire hotel mogul who spent some time in the pokey for bending tax rules. The collective income of the corporations that paid zero income tax between 1998 and 2005 was more than $2.5 trillion. Most of those corporations moved their profits to places like Bermuda, the Cayman Islands, and Barbados through complex accounting webs that are virtually impenetrable for underfunded, undermanned U.S. revenue organizations. At this point, the GAO has not analyzed data beyond 2005, but it is unlikely that any of these same corporations have voluntarily started paying taxes.
And now, to throw salt on this gaping wound, there is an effort underway by corporate lapdog politicians to sell something to the American public that is going to be called a "tax holiday." The tax holiday that the U.S. Chamber of Commerce has in mind goes something like this: All of the trillions of dollars that these corporations have paid no taxes on will be moved back into U.S. banks under a mechanism that looks like a criminal amnesty program to most objective observers. The corporate K-Street lingo for the mechanism refers to it as a "Tax Holding Reparations Act." The translation of that is that these corporations got away with paying no taxes by keeping their accounts in offshore territories, and now when they move their money back to the U.S., they still will have no tax obligations on those trillions of dollars. We should all incorporate!
Corporations like AIG love the idea of a good old-fashioned tax holiday. In fact, while U.S. taxpayers were bailing them out to the tune of $150 billion, AIG was using places like Barbados and Bermuda to park billions of dollars in annual profits. If you go to their website, you will see them brag about their banking experience in no-tell, no-tax places like the Cayman Islands and Gibraltar. The system works so well that just months before Lehman declared bankruptcy, they transferred $400 billion in assets to offshore accounts. This is one of those stories that will not end well.
K Street will get its tax holiday. The media will ignore the story and trillions of dollars will never move through the federal tax system to pay for bailouts, schools, roads, bridges, and America's military. Helmsley is right when we make relative comparisons between companies like AIG and the average taxpayer, only poor people pay taxes.
Follow Mike Papantonio on Twitter: www.twitter.com/RingofFireRadio