Sunday, November 19, 2017
Editorials

Editorial: Corporate tax trickery

RECOMMENDED READING


When Apple's chief executive was before a Senate investigative committee last month answering questions on his company's efforts to avoid paying taxes, he represented just one of many notable companies engaged in legal tax cheating. Washington should crack down on the use of overseas tax havens, and the bipartisan concern raised over Apple's tax gimmicks is a promising sign that perhaps Congress will start doing its job. For too long, both political parties have conspired to allow corporations to avoid paying their fair share.

While Apple paid more than $6 billion in taxes last year on its American operations, it has been able avoid paying at least $74 billion in federal taxes between 2009 and 2012, according to congressional investigators. What Apple did is not technically illegal, but it should be and would be were it not for the influence corporations have on both political parties.

Apple established subsidiaries in countries such as Ireland, where the company would be exempt or nearly so from taxation. Under U.S. tax law, subsidiaries are taxed where they are incorporated, even though some of Apple's entities had no employees and were operated from Apple headquarters in California. Under Irish law, corporations are taxed where they are managed and controlled. In other words, Apple claims to be essentially stateless for tax purposes, after recording 65 percent of its worldwide income in Ireland.

Apple uses a typical trick to hide American-made profits overseas. It assigns valuable intangible assets such as patents to a subsidiary in a tax haven country. Profits made from American clients and consumers then become royalties paid to that subsidiary for the use of the patent. This defers the company's U.S. tax liability on those profits until they are repatriated back into the country.

The loss to the federal Treasury is staggering. In 2008, American multinational companies claimed that 43 percent of their $940 billion in overseas profits was earned in five small tax-haven countries, including Ireland. Yet only 4 percent of their foreign workforce was in those countries, according to the nonpartisan Congressional Research Service. Sen. Carl Levin, D-Mich., chairman of the investigative committee, cited a study that said 30 U.S. multinational companies with more than $160 billion in profits paid no federal income taxes over the last three years.

Part of the solution is to prevent American companies from deferring taxes on overseas profits. That would encourage the repatriation of the estimated $1.6 trillion in profits that U.S. corporations have hoarded overseas, leading to more investment and economic growth at home. And the added tax revenues could be used to help reduce the corporate income tax rate that stands at 35 percent, something that President Barack Obama and many in Congress in both parties want to do.

The burden of federal taxes has markedly shifted from corporations to individuals over the last 30 years. In 2011, individual tax receipts totaled $1.1 trillion while corporate taxes contributed only $181 billion. This glaring imbalance should be corrected.

Comments

Editorial: Good for Tampa council member Frank Reddick to appeal for community help to solve Seminole Heights killings

As the sole black member of the Tampa City Council, Frank Reddick was moved Thursday to make a special appeal for help in solving four recent murders in the racially mixed neighborhood of Southeast Seminole Heights. "I’m pleading to my brothers. You ...
Published: 11/17/17
Editorial: It’s time to renew community’s commitment to Tampa Theatre

Editorial: It’s time to renew community’s commitment to Tampa Theatre

New attention to downtown Tampa as a place to live, work and play is transforming the area at a dizzying pace. Credit goes to recent projects, both public and private, such as the Tampa River Walk, new residential towers, a University of South Florid...
Published: 11/17/17
Editorial: Rays opening offer on stadium sounds too low

Editorial: Rays opening offer on stadium sounds too low

The Rays definitely like Ybor City, and Ybor City seems to like the Rays. So what could possibly come between this match made in baseball stadium heaven? Hundreds (and hundreds and hundreds) of millions of dollars. Rays owner Stu Sternberg told Times...
Published: 11/16/17
Updated: 11/17/17
Editorial: Wage hike for contractors’ labor misguided

Editorial: Wage hike for contractors’ labor misguided

St. Petersburg City Council members are poised to raise the minimum wage for contractors who do business with the city, a well-intended but misguided ordinance that should be reconsidered. The hourly minimum wage undoubtedly needs to rise — for every...
Published: 11/16/17

Editorial: Make workplaces welcoming, not just free of harassment

A federal trial began last week in the sex discrimination case that a former firefighter lodged against the city of Tampa. Tanja Vidovic describes a locker-room culture at Tampa Fire Rescue that created a two-tier system — one for men, another for wo...
Published: 11/15/17
Updated: 11/17/17
Editorial: Firing a critic of his handling of the sewer crisis is a bad early step in Kriseman’s new term

Editorial: Firing a critic of his handling of the sewer crisis is a bad early step in Kriseman’s new term

Barely a week after St. Petersburg Mayor Rick Kriseman promised to unite the city following a bitter and divisive campaign, his administration has fired an employee who dared to criticize him. It seems Kriseman’s own mantra of "moving St. Pete forwar...
Published: 11/15/17
Updated: 11/16/17
Editorial: USF’s billion-dollar moment

Editorial: USF’s billion-dollar moment

The University of South Florida recently surpassed its $1 billion fundraising goal, continuing a current trend of exceeding expectations. At 61 years old — barely middle age among higher education institutions — USF has grown up quickly. It now boast...
Published: 11/14/17
Updated: 11/17/17
Editorial: Vets should not have to wait years for benefits

Editorial: Vets should not have to wait years for benefits

American military members hurt in service to their country should not have to wait a lifetime for the benefits they deserve. But that’s a reality of the disability process at the U.S. Department of Veterans Affairs, which hasn’t made payi...
Published: 11/14/17

Editorial: Deputies’ rescue reflects best in law enforcement

The bravery two Hillsborough County sheriff’s deputies showed a week ago is a credit to them and reflects the professionalism of the office.Deputies Benjamin Thompson and Trent Migues responded at dusk Nov. 11 after 82-year-old Leona Evans of Webster...
Published: 11/13/17
Updated: 11/17/17

Another voice: An untrustworthy deal with Russia

President Donald Trump’s latest defense of Russian leader Vladimir Putin included — along with a bow to his denials of meddling in the U.S. election — an appeal to pragmatism. "Having a good relationship with Russia is a good thing, not a bad thing,"...
Published: 11/13/17
Updated: 11/14/17