The Robin Hood Tax: A Response to Corporate Tax Evasion
October 30, 2013
The RobinHoodTax.org & Alan Pyke / ThinkProgress & Matt Krantz / USA Today
Among companies listed on the S&P 500, almost one in nine paid an effective tax rate of zero percent -- or even lower -- over the past year, according to an analysis by USA Today. Meanwhile, momentum is building globally for the Robin Hood Tax, a tiny tax on Wall Street and other big banks that would generate hundreds of billions of dollars each year to assist ordinary people, fight poverty and tackle climate change -- here at home and around the world.
The Robin Hood Tax
Friends of the Earth & The Robin Hood Tax.org
(October 28, 2013) -- Momentum is building globally for the Robin Hood Tax, a tiny tax on Wall Street and other big banks that would generate hundreds of billions of dollars each year to assist ordinary people, fight poverty and tackle climate change -- here at home and around the world.
Across the world, people are showing that it's time to put the people before the banks. Please help us spread the word by sharing this action with your friends and family. It only takes a few seconds but could make a huge difference. Together we can make this happen.
Europe is on the verge of establishing a Robin Hood Tax across 11 countries, but they need a push from the people. That's why we're asking you to add your name to a petition to European leaders demanding a Robin Hood Tax. Success in Europe will pave a much easier path to establishing such a tax here in the United States.
Help us reach our goal of one million people calling for a Robin Hood Tax. More than 600,000 people have already signed! Add your name to our petition now.
The Robin Hood Tax is a miniscule fee on Wall Street and other financial sector transactions, such as the trading of stocks, bonds, derivatives and other financial instruments -- most of which are traded not by people, but by computers in a matter of microseconds.
The tax would curb harmful speculation and raise hundreds of billions of dollars of new revenue to pay for urgently-needed public goods and services, such as helping developing countries cope with the food shortages and threats to public health caused by our changing climate.
Please sign the petition now. It is past time we bring fairer taxation to the bloated financial sector, awash in profits and fat cat bonuses.
A Robin Hood Tax in Europe would be a huge step forward. It would help tremendously in setting the stage for implementing such a financial transaction tax here at home.
What's more, the American people already support the tax. In polling commissioned by Friends of the Earth US, two-thirds of voters favored the tax, saying yes to “taxes on Wall Street banks that helped create our economic problems.” A majority of poll respondents favored reining in “the casino culture of Wall Street” and “skimming the fat off a sector that can afford to pay.”
We need your help to reach one million petition signers in support of a Robin Hood Tax. Click here now and add to the global momentum.
Friends of the Earth US, Washington DC, Berkeley CA
Campaign video by Richard Curtis and Bill Nighy, about the Robin Hood Tax, a tiny tax on bank transactions that could raise hundreds of billions for public services and to tackle poverty and climate change at home and around the world. Add your own voice to the campaign at http://www.robinhoodtax.org.uk
This film was made with the support of the European Commission: http://ec.europa.eu/unitedkingdom/
Over 10 Percent Of America's Largest Companies Pay Zero Percent Tax Rates
Alan Pyke / ThinkProgress
(October 25, 2013) -- Among companies listed on the S&P 500, almost one in nine paid an effective tax rate of zero percent -- or even lower -- over the past year, according to an analysis by USA Today.
There are 57 separate companies listed on the index that paid a zero percent rate from the past year. Those companies include both household names like Verizon and News Corp. and lesser-known corporate giants like the data storage manufacturer Seagate (market value $15.9 billion) and Public Storage (market value $29.5 billion).
Many of the companies USA Today identified in its analysis as paying negative rates make the list because they lost money, but several were profitable. Previous analyses have shown that the typical corporation pays a lower effective tax rate than most middle-class families, and a far lower one than the statutory corporate tax rate against which business interests disingenuously rail.
Getting to a zero percent tax rate despite turning a profit requires creative accounting, but not lawbreaking. The corporate tax code allows companies to avoid tax liability even in years when they turn a profit.
Some of the profitable companies on the newspaper's list, such as General Motors, achieved a zero percent rate by banking tax credits from previous years when business was bad. But the more common gambit involves moving revenues from parent companies to offshore subsidiaries based in tax haven countries in the Caribbean, Europe, and elsewhere.
Such offshoring of profits has caught the attention of policymakers in the United States and Europe this year, with the focus predominantly on Apple Inc. The US tech giant not only avoided the American tax system, but managed to shelter about $100 billion in revenues from any taxes at all.
That scheme relied upon a loophole in Irish law, which that country's government says it intends to fix, but the narrow change proposed by Ireland's finance minister will not address the larger problem of corporate tax avoidance.
Tax dodging costs the US about $300 billion per year. Much of that lost revenue is from individuals, rather than corporations. The country is cracking down on individual tax dodgers and striking deals with countries like Switzerland and the Cayman Islands that will help identify tax cheats starting in 2014.
The corporate tax avoidance problem is thornier, as it is generally done through entirely legal methods. Coordinating international tax law in a way that would minimize corporate tax trickery is very difficult under the current approach, and a paradigm shift in business tax law may be necessary to end the accounting practices that rob countries of tax revenue.
Large Companies Find Ways to a Zero Tax Rate
Matt Krantz / USA Today
(October 24, 2013) -- Despite widespread groans about the recent disclosure that Apple is finding ways to cut its federal tax bill, an analysis shows the computer giant is one of scores of corporations largely dodging the taxman.
A surprising number of companies in the Standard & Poor's 500, 57, have found ways to pay effective tax rates of zero, according to a USA TODAY analysis of data from S&P Capital IQ.
The effective tax rate is a popular measure used by investors to compare how much companies pay in tax relative to profit.
The news comes months after after the Government Accountability Office released a report showing that companies in 2010 reported an average effective tax rate of 12.6%, well below the 35% federal corporate tax rate.
Corporate giants such as telecom firm Verizon, drugmaker Bristol-Myers Squibb and power management firm Eaton, all reported effective tax rates of 0% during the past 12 months.
The findings underscore that while many companies bellyache about the top federal income tax rate of 35%, in reality, many pay much less than that, says Nick Yee of Gradient Analytics. "Investors hope company management is doing everything they can to generate profit, legally," he says. "But the tax code is gray, and there's often no set guidance."
Some ways companies are driving their effective tax rates to zero include:
Offshore transfer payments. One of the favorite ways for companies to slash their tax bills is by setting up foreign subsidiaries to make raw materials and components in countries with low tax rates.
The companies' US operations then purchase these parts from the foreign units at well above cost. By doing this, the overseas unit makes a large profit, which then escapes US taxes, as long as it stays in the foreign country, Yee says.
Transfer payments are used at Bristol, Forest Labs, Agilent Technologies, Eaton and Lam Research, he says. Many companies are likely waiting for a US tax-holiday, giving them a chance to bring the cash to the US tax-free, Yee says. Agilent and Bristol declined to comment. The other companies didn't respond.
Harvesting losses. Most of the companies with effective tax rates of zero, or even negative, are money losers. While Hewlett-Packard, J.C. Penney and E-Trade pay taxes, since they lose money, they have negative effective tax rates due to the way the number is calculated. Yet, some big companies that have lost money in the past accumulate credits that can be used to offset tax bills in future years.
These reserves can be very lucrative and give profit a boost by lowering the effective tax rate, Yee says. Companies with these tax loss reserves include General Motors and Crown Castle, he says. GM, for instance, released credit from its reserve, taking it down from $45 billion to $11 billion. Investors must be aware, though, that once that $11 billion reserve is used up, the company's tax rate returns to the statutory rate.
All this follows tax rules, but investors need to be aware. "This isn't anything illegal, but the reserve will run out," Yee says. GM declined to comment. The other companies didn't respond.
Accounting rules. A big reason that Verizon's effective tax rate is so low, coming in at a negative 4.8%, is largely due to accounting. The company's sped-up depreciation, severance and pension costs are large credits that contribute to pushing the company's taxes down, says Jonathan Schildkraut of Evercore. But there's also a distortion caused by the company's 55% interest in Verizon Wireless.
Vodafone, which owns 45% of Verizon Wireless, pays taxes on its share, but the entire profit is reported on income. Adjusting for this, Verizon's effective tax rate is closer to 30%, the company says.
Verizon is buying Vodafone's stake, which will eliminate the issue in the future. Similarly, real estate investment trusts have low effective tax rates because they pass profit to shareholders, who then pay the taxes.
The question for investors is whether or not companies paying low effective tax rates might, eventually, attract the attention to regulators. "They are slow at getting at these issues," Yee says.
S&P 500 members citing effective
tax rates of 0% in past twelve months,
ranked by market value (in billions):
Regeneron Pharmaceuticals: $29.6
Public Storage: $29.5
Avalonbay Communities: $17.4
Agilent Technologies: $16.9
Vornado Realty Trust: $16.8
Boston Properites: $16.7
Seagate Technology: $15.9
News Corp.: $9.8
Lam Research: $8.8
Kimco Realty: $8.6
Plum Creek Timber: $8.4
Apartment Investment & Management: $4.3
Perkin Elmer: $4.2
Source: S&P Capital IQ
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