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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Reich: Expat Companies Should Be Banned from Lobbying

From Former Secretary of Labor Robert Reich’s Salon.com post, “Walgreens shouldn’t have a say about how the U.S. government does anything: The former secretary of labor weighs in on corporate America’s newest bid to reduce its tax bills“:

Dozens of big U.S. corporations are considering leaving the United States in order to reduce their tax bills…But they’ll be leaving the country only on paper. They’ll still do as much business in the U.S. as they were doing before.
The only difference is they’ll no longer be “American,” and won’t have to pay U.S. taxes on the profits they make.
Okay. But if they’re no longer American citizens, they should no longer be able to spend a penny influencing American politics.

Reich demolishes the corporate whine that they have to split the U.S. because, y’know, taxes:

It’s true that the official corporate tax rate of 39.1 percent, including state and local taxes, is the highest among members of the Organization for Economic Cooperation and Development…But the effective rate – what corporations actually pay after all deductions, tax credits, and other maneuvers – is far lower.
Last year, the Government Accountability Office, examined corporate tax returns in detail and found that in 2010, profitable corporations headquartered in the United States paid an effective federal tax rate of 13 percent on their worldwide income, 17 percent including state and local taxes. Some pay no taxes at all.

He continues, “One tax dodge often used by multi-national companies is to squirrel their earnings abroad in foreign subsidiaries located in countries where taxes are lower. The subsidiary merely charges the U.S. parent inflated costs, and gets repaid in extra-fat profits. Further says Reich, “Becoming a foreign company is the extreme form of this dodge. It’s a bigger accounting gimmick. The American company merges with a foreign competitor headquartered in another nation where taxes are lower, and reincorporates there.”
Clearly, this is an issue Dems could make some serious gains with, especially because their Republican opponents will do everything they can to kill any reforms to end this privilege that robs the U.S. treasury and increases taxes on working people. He cites the example of Walgreen’s:

Walgreens, the largest drugstore chain in the United States with more than 8,700 drugstores spread across the nation, is on the verge of moving its corporate headquarters to Switzerland as part of a merger with Alliance Boots, the European drugstore chain.
Founded in Chicago in 1901, with current headquarters in the nearby suburb of Deerfield, Walgreens is about as American as apple pie — or your Main Street druggist…Even if it becomes a Swiss corporation, Walgreen will remain your Main Street druggist. It just won’t pay nearly as much in U.S. taxes.
Which means the rest of us will have to make up the difference. Walgreens morph into a Swiss corporation will cost you and me and every other American taxpayer about $4 billion over five years, according to an analysis by Americans for Tax Fairness.
The tax dodge likewise means more money for Walgreens investors and top executives. Which is why its large investors – including Goldman Sachs — have been pushing for it.

Reich responds “Even if there’s no way to stop U.S. corporations from shedding their U.S. identities and becoming foreign corporations, there’s no reason they should retain the privileges of U.S. citizenship…In fact, Walgreens should no longer have any say about how the U.S. government does anything.”
Reich notes further, “Since the 2010 election cycle, Walgreens Political Action Committee has spent $991,030 on federal elections. If it becomes a Swiss corporation, it shouldn’t be able to spend a penny more.”
Amen. Democratic leaders should make this a leading issue and force Republicans to squirm as they try to justify this indefensible expat corporate privilege that screws American taxpayers. If there was ever an issue that could win the support of the white working class the pundits are always talking about, here it is, a big fat softball, begging to be belted out of the park.

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