Legally avoiding taxes is — legal. The problem becomes: How to trash American corporations for doing so?
A report by the Institute on Taxation and Economic Policy, or ITEP, said data showed how profitable Fortune 500 companies have routinely lowered their tax bills long before the Republican tax overhaul signed into law by President Donald Trump in December.
That tax overhaul famously reduced the top corporate tax rate from 35% to 21%, and ended the unique American institution of taxing what Americans do outside the country. It compelled businesses to count profits banked offshore but made it comparatively easy to bring the loot back to the U.S.
For most companies, this resulted in a higher one-time tax bill coupled by the promise of lower bills in future years, which has gotten new money spraying in all directions. (Now, Wimpy made the same promise of Popeye regarding hamburgers, and the new law might seem like a bait-and-switch if Donald Trump were going somewhere and the Swamp-Dwellers re-assumed control.)
Anyway, ITEP says that some of the largest 500 companies are legally avoiding taxes. This would be the corporations we hate because they steal from us and sell us things we do not want to buy.
Of course, if a company avoids taxes, it does so by availing itself of favors in the tax code, and the tax code grants these favors only if the taxpayer does something the government wants it to do. Why, your humble correspondent has done this. Before Barack Obama slapped price controls on money, I used to own Treasury bonds. I did Washington the favor of loaning it money at below-market rates, and it returned the favor by not taxing the interest I earned, and by even barring my state from taxing it. I did this even when the net return was worse, for the simplification and for the joy of mailing less money to the government, though I was cooperating with them by loaning them my savings in the first place.
By doing too much of what the government wants, one can reduce one’s tax bill to zero. One’s only risk then is scandal. A public-interest group will publish your gross income and what a miserly tax payment you made. Politicians will propose an Alternative Minimum Tax to capture this excess money from society’s most obedient taxpayers. Sometimes, a particularly clueless President (like the immediate past one) will propose this solution mindless of the fact that the nation already had one.
A really effective scandal must cite Amazon. This corporation is widely hated, even by the Make America Great Again crowd, who view it as a safer and more reliable way to shop from an amazing selection of goods if you can wait two days, compared to driving downtown. Amazon, you see, is Trump’s chief enemy, because Jeff Bezos also owns the Washington Post, one of Trump’s main tormentors.
The problem statement seems to be missing. Happily, there is a solution:
ITEP said while “disclosures made by these companies are too vague to allow a complete diagnosis of how they are avoiding income taxes” they used a variety of tax breaks to cut their tax bills.
We need to compel more disclosures of private information. This will enable us to devise a more perfect scandal. Compelled disclosures are a gentler, more Republican, alternative to actual compulsion. Likewise, we need ten years of tax filings from Trump himself (by raiding his lawyer, if we cannot shame Trump into disclosing them himself) in order to find and publish ways in which he shamelessly took unfair advantage of the law.