Corporate Welfare (Quite proud of myself for this one.)
The series I'm currently writing is called 'Redefining Laziness'. This is part one and deals with the drag corporate welfare has on the economy. Not sure if I can plagiarize my own work, but I'll just post the first part. Enjoy!
Redefining Laziness: Corporate Welfare
“America is the wealthiest nation on Earth, but its people are mainly poor, and poor Americans are urged to hate themselves…. It is in fact a crime for an American to be poor, even though America is a nation of poor. Every other nation has folk traditions of men who were poor but extremely wise and virtuous, and therefore more estimable than anyone with power and gold. No such tales are told by American poor. They mock themselves and glorify their betters.”
-Kurt Vonnegut, “Slaughterhouse Five”
“Parasites”, “pests”, “mooches”, “lazy-asses”, “freeloaders”, “losers”, “idiots”, and “the entitled” are all terms that have come to define the American poor. Beyond my utter disgust with such sweeping generalizations, they do raise many questions.
During my research, I spoke with a wide array of Conservatives. While not all held this belief about the poor, many did believe that every single individual on welfare was lazy. While I searched high and low, no studies have been conducted on the productivity effect of those on social programs. So these notions stem from only personal experience and bias (but to be fair, this can be said about those who believe social programs help.)
I’ve experienced many different forms of welfare and the people who use it, some deserving of the assistance and others not. In fact, I was one of those parasites who grew up food programs. When my mother could not feed her two toddlers, she took advantage of what she could.
It is the phrase “take advantage” that I believe leads to the negative characterizations of those on social welfare: “Take, take, take” is the poor’s motto. America takes so much time pointing the finger at the poor for draining the economy, they forget that there are others who could be considered the leeches of the economy. These people not only take, but demand. We live in a country with two forms of welfare: social and corporate.
Corporate Welfare comes in many different forms, including tax breaks, subsidies, grants; pretty much any incentive to encourage a business to stay or come to a town or state. Politicians have tried to shield massive businesses from taxes while handing them cash. The purpose of this series is to show the true parasites of America, businesses.
Passing Profits to “Offshore” Accounts
It starts with the way businesses declare income. The different classifications connect back to the taxes corporations pay.
Pass-through companies make up the majority of all businesses. The main purpose of pass-through is to avoid double taxation. Company owners will claim the business’ profits as their own personal income to avoid taxation on a corporate level.
The significance of pass-through companies is what happens to profits once they are in the owner’s name. Understandably, companies do not want to be taxed twice. But instead, many avoid taxes altogether by using “offshore” accounts (more on that in a second).
“Offshore” accounts have long been a favorite device of the wealthy. J.P. Morgan found that 70 U.S.-based companies have stashed a total of $1.7 trillion in assets in “offshore” accounts.
In 2012, General Electric Co. and Pfizer Inc. led the way with “offshore” accounts, hoarding $187 billion “overseas”. By dodging domestic taxes, they saw an 18.4 percent increase in “offshore” holdings.
Tech leaders have also reaped ludicrous benefits from this tax-evading system. Bloomberg reported that Apple, Google, and Microsoft all saw over 40 percent increase in profits in 2011.
But the best and most ridiculous part of this whole cluster-f#@%, is that most of the money in “offshore” accounts is actually in America.
The Wall Street Journal reported that giants like Google, Microsoft, and EMC Corp. were all found to keep over 75 percent of cash owned by foreign subsidiaries in American banks. The money is also divided among U.S. government and corporate securities. They do not even take the time to convert the money into currency of the country they are supposedly indefinitely parking it in.
The Wall Street Journal quoted Professor Edward Kleinbard at the University of Southern California Gould School of Law and former chief of staff of Congress’s Joint Committee on Taxation as saying, “If it is a U.S.-dollar asset, that means ultimately it is in the U.S. economy in some fashion, where it is not is in the hands of the firm’s shareholders.”
So how is this even possible? Semantics. While the money may be physically on American soil, it just takes checking the right box on paper. A company will have a CFO or treasurer declare funds permanently or indefinitely overseas. They report this to the company’s auditors who will simply rubber-stamp it. This practice is considered okay as long as the company is consistent and does not make a habit of cycling the money back into the U.S. economy. In the eyes of the IRS and the law, this money is technically “overseas”, allowing companies to side-step taxation.
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http://sandbox.spcollege.edu/index.php/2013/03/redefining-laziness-corporate-welfare/
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