When Bernie says the system is rigged, this is what he means …

Bernie Sanders

If you, as an individual taxpayer, tried to open a mail-box account in tax-free Bermuda and pretended to live and work there, the IRS would never let you get away with it. However, big corporations have been doing the functional equivalent for years now, with a net cost to the Treasury estimated at well over $100 billion a year and growing.

On Monday, however, the Obama administration announced strong administrative action designed to discourage such schemes. Its new regulations are aimed at blocking “tax inversions” by which major U.S.-based corporations pretend to be purchased by smaller foreign companies and pretend to move their headquarters overseas, thus enabling them to cut their federal taxes by billions of dollars.

A related corporate scam called “earnings strippings,” an accounting trick by which U.S. corporations transfer U.S. earnings to lower-tax foreign subsidiaries through fake loans, is also being shut down.

“It’s going to be a major impediment. They’re pretty much taking all of the juice out of inversions,” Robert Willens, a New York-based tax analyst, told the Wall Street Journal. “They’ve addressed literally every benefit that one attempted to gain from an inversion and shut them all down systematically.”

The new rules issued by the Treasury Department take effect immediately, and may halt a $160 billion tax-inversion scheme involving Pfizer, which was trying to move its nominal HQ to Ireland. Like other companies, the pharmaceutical giant enjoys the stability, the infrastructure, the market, the scientific know-how, the education and banking system and the intellectual-property protections that the United States provides. Their executives want the standard of living here.

They just don’t want to help pay for it.

According to tax experts, the rules announced Monday should do a lot to discourage tax inversions, but more effective steps would require that our do-nothing Congress actually do something. The Obama administration has sought greater authority to intervene to prevent such scams, and Democrats in both the House and Senate have introduced legislation to block the tax-evasion strategy.

But most Republicans have balked. For example, here’s the response of Rep. Kevin Brady of Texas, chairman of the tax-writing House Ways and Means Committee, to Monday’s announcement:

“Instead of unveiling commonsense policies to help American employers compete globally and create new jobs for our workers, the Obama Administration just announced punitive regulations that will make it even harder for American companies to compete and will further discourage businesses from locating and investing in the United States.”

This is Alice in Wonderland stuff. When viewed through the GOP perspective, rules changes that discourage the movement of companies overseas become policies that will somehow “further discourage businesses from locating and investing in the United States?

Let’s keep in mind that despite all of its woe-is-we poor-mouthing, corporate America is thriving as never before.  Corporate AFTER-TAX profits have more than tripled since 2000, and remain at near-all-time highs. And while corporations whine about our nation’s comparatively high corporate tax rate, the reality is that very few if any actually pay taxes at that rate. For example, Pfizer, the company attempting to relocate to Ireland, claims it pays a corporate tax rate of 25 percent. A deeper dig by the Wall Street Journal shows that its actual rate in 2014 was 7.5 percent. In 2012, it was 0.2 percent.

And according to a study by the Congressional Research Service, which compared the United States to other major industrialized countries:

“Although the United States has the world’s highest statutory corporate tax rate, the U.S. effective corporate tax rate is similar to the Organization for Economic Co-operation and Development (OECD) average. Further, the United States collects less in corporate tax revenue relative to Gross Domestic Production (GDP) (2.3% in 2011) than the average of other OECD countries (3.0% in 2011).”
corptax

Source: Tax Policy Center

When Bernie Sanders complains that the U.S. economic system is rigged in favor of the wealthy, this is the kind of thing he means.

Reader Comments 0

470 comments
ccrider27
ccrider27

Great article, great summary of the problem.


Bernie Sanders has been talking about this for years. He has never flip-flopped on this issue, unlike some other politicians that we know. It's no coincidence that Obama is doing this just as Bernie begins to soar in the primaries.


Another tax rule that Obama could change with the stroke of a pen is the carried interest rule. Politicians of both parties rail about this provision every 4 years, but they never seem to get it done.

Don S. Rowley
Don S. Rowley

People need to read the NY Daily News interview with Bernie Sanders to see how unprepared and low on details he is. He's just as bad as Donald Trump. Very loud and bombastic but not one clue as to how to do what he's proposing to do. You have to be beyond stupid to vote for someone like Bernie Sanders or Donald Trump. What the hell are their supporters listening too?

Wayne Gregory III
Wayne Gregory III

You do know he has 3 and 4 step plans to eliminate a lot of wrong doings and plans to lower costs and also put money back in for our healthcare and education. I think u need to research \U0001f60e\U0001f60e\U0001f60e\U0001f60e

Don S. Rowley
Don S. Rowley

3 step plan like a drug rehab program? I think y'all need to look into this con artist a little more

Wayne Gregory III
Wayne Gregory III

No. Nothing to do with the drug issues but things like stop paying other people to provide us coverage and just cover our own people. things like this police reform. Hoe they have hunting grounds laws to themselves . Like the killings of innocent people, unarmed .

RichardHead
RichardHead

Lets see....lower our tax structure to the limit of Ireland and POOF they come back...more jobs here...more tax money here...next

NWGAL
NWGAL

Obama is taking action. Obama the corporate shill who accepted millions from corporations for his campaigns, whose friends work for Wall Street, whose legislation Bernie deems inadequate while doing nothing to help down ballot Democrats win. So, yeah, this is Bernie's platform. There just isn't a train arriving on that platform.

laceylu
laceylu

Yes, and Dems are just as guilty. Just ask Hillarious how generous corps are to her Clinton Crime Family operation. And don't make it sound like the Repubs are the only ones protecting corps. The Dems are just as damn guilty.

Harv
Harv

Well then GOP, do "something"!

Stephen Belt
Stephen Belt

He only wants to know so can can make sure their fair share is stolen thru mob rule

Mike Wright
Mike Wright

Hillary supporters think Bernie supporters are always bashing her. I say exposing. Sometimes telling the truth looks like bashing, especially when the truth is really really ugly.The fact of the matter is, Hillary Clinton is on the Corporate Wall St. payroll, Bernie Sanders is on ours. She works for them, and He works for us. Any questions.

NWGAL
NWGAL

Did you vote for Obama? He outraised Hillary on Wall Street, from corporations.

0.838659444515
0.838659444515

We might be working on the wrong problem.  We seem to be continuously dealing with symptoms of the root cause when it come to the tax code.  Why not replace the tax code.  Is the current code built on the foundation of fairness?  It is set-up for many to avoid or reduce their tax burden.  C'mon man let's work on the right issue for once!

Donnie_Pinko
Donnie_Pinko

Again, there is a good reason that President Obama is supporting Hillary to be America's next president.  // 

Oh there's a good reason alright. It's just not a good reason for me (or 90% of the US population).

RantNRave
RantNRave

@Donnie the Pinko


Here's a quarter call someone who cares !

RaindroidWillBoy
RaindroidWillBoy

@Visual_Cortex

IRS requested $3.2 billion for information technology (IT) investments. This accounted for 23 percent of IRS’s budget request for fiscal year 2016. However, IRS provided inaccurate data on actual obligations to date for major IT investments in its congressional justification (CJ) for fiscal year 2016. As a result, Congress does not have accurate, reliable, and complete data on IT investments to inform its budget decisions or aid in its oversight. Additionally, IRS did not use standard definitions for “life-cycle cost” and “projected useful life of the current asset” or explain the terms in a way that could be understood and used. 

Wascatlady
Wascatlady

Put these federal level shenanigans together with state tax giveaways, and you are talking about REAL MONEY!

DownInAlbany
DownInAlbany

@MaryElizabethSings "...how she will reform Wall Street."  Oxygen, someone give me oxygen.  I've used it all up laughing at the sheer idiocy of that statement.

TBS
TBS

Can't help but laugh at those who think that many in big business just want a more simplified tax code with lower rates and less deductions and loopholes

If you lower the rate to 15% with less deductions and loopholes but I pay 10% under the current system .. Why do I want a new code?

Unless they get to pay less they will let you carry the water about tax reform and laugh as they donate huge sums to both parties

St Simons he-ne-ha
St Simons he-ne-ha

I was taxed on my income for 38 years, and I went to the publix, and wuz taxed again, double taxed, andd i went to the gas station with my receipt, and wuz taxed AGAIN, triple taxed.

Now dynamically scored, that like 3000x taxed!


Gibberish.


Bernie & Jay pinned the tail on the donkey. 

Don't be distracted by gibberish.

Bhorsoft
Bhorsoft

If Pres.Obama signed executive orders declaring English as official language of the United States, requiring Christian prayers in schools, cutting taxes for corporations and the top 1%, making abortion illegal, and making guns of any type easy to get with no background checks Republicans would still find something about those actions to criticize because of, well, Obama.

Bhorsoft
Bhorsoft

@Hedley_Lammar @td1234 @Bhorsoft Agreed.  Point though that if he started enacting Republican platform policies, they would still find reasons to slam him for doing what they want.

DebbieDoRight
DebbieDoRight

It's hilarious for them to think that Hillary is going to do anything but continue to get filthy rich from campaign contributions from the ultra-evil big business.  What a crock.

Here's our choices this year:

  1. A bigoted, ranting, sanctimonious shill for the Religious right wing
  2. A con man
  3. A man who is nothing more than a roaring lion in sheep's clothing
  4. A good man with good ideas but no way to back up 1/12 of what he's proposing
  5. And Hillary Clinton
  6. Also as a bonus, we may get these "winners" if Trump loses the nod: An Ayn Rand love child; and a man who thinks so highly of himself, he always uses the Queen's "We" when addressing the unwashed masses.

I happen to LIKE America and don't want to see it fall; I"ll take Hillary. You, of course, are welcomed to pick the person who more closely resembles your delusions.

Visual_Cortex
Visual_Cortex

@DebbieDoRight

 no way to back up 1/12 of what he's proposing

Dude.

Hils will have  "no way to back up 1/12 of what she's proposing", either, so long as the Goopers control the House.

I'm not saying Hils can't move some things forward. She can, and will. But let's not pretend that Bernie's proposing crazy stuff that can never be legislated. It can. It won't be right away, but to put the ideas out there as mainstream objectives is huge. Yuuuge.

And, I submit, much smarter politics than more Clintonesque triangulation, Third Way, Democrat Losership Council "be-happy-with-a-half-loaf-you-hippies" business.

DebbieDoRight
DebbieDoRight

@Visual_Cortex @DebbieDoRight - I'm thinking in about 15 years, Bernie's ideas will be fully integrated into the American political model and pushed by the (now) 20 somethings.

But that's in 15 years. For now, we gotta dance with the guy who brought us to the Prom.

Donnie_Pinko
Donnie_Pinko

@DebbieDoRight 

It's the closest thing to an argument pro Hillary that I can respect. 

And yet, I still reject it.

xxxzzz
xxxzzz

@DebbieDoRight HIllary is #5 on that list as she is most likely to make it fail.  She is filled with paranoid delusions.

MaryElizabethSings
MaryElizabethSings

@Visual_Cortex @DebbieDoRight


According to commentators, Bernie Sanders does not know details of foreign policy in any meaningful way, and in terms of his domestic ideals coming to fruition, Bernie does not know what specific laws and which specific people should be prosecuted for illegal acts on Wall Street.  Weak on details is Bernie.  Bad for being President.  Hillary knows details in both domestic and foreign policy, and she has a solid vision for our nation's trajectory as well as the world's trajectory.


Those who refuse to see these gifts of hers are either blind or sexists, imho.

xxxzzz
xxxzzz

@MaryElizabethSings @Visual_Cortex @DebbieDoRight Right.  Merrill Lynch gave her gifts.  Whitewater was a gift.  Lots of Wall St. firms paid her hundreds of thousands for a bad speech-gift.  Clinton Foundation for benefits while Secretary of State, gifts.  To not see that you have to be blind or a female sexist.