Stop shirking

The United States has a major activity that’s not usually thought of as an “industry.” But that’s exactly what it is, if you accept that an industry is “an aggregate of enterprises in a particular field.”

That very busy industry is tax avoidance: It’s the active pursuit of ways in which to avoid paying taxes rightly owed to the government—and by extension, to the public.

In 2006, the Senate Committee on Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations released a 370-page report which estimated that tax-avoidance schemes by super-wealthy American individuals and corporations are costing the U.S. Treasury as much as $100 billion a year in taxes that should have been paid but aren’t.

Not only do accountants, lawyers and corporate fiscal officers spend prodigious amounts of time and energy figuring out how their clients and employers can use every possible (sometimes) legal exemption to reduce their tax obligations, they combine to employ lobbyists to persuade Congress and state legislatures to enact additional exemptions.

Billion-dollar corporations take out post-office boxes in Bermuda and other low-tax localities and call it their “headquarters” so they can reduce their share of paying for education, health care and highways in the United States.

It is, as David Cay Johnston says in his marvelous but distressing book, Perfectly Legal, perfectly legal.

Thanks to the tax-reduction stratagems enacted by a compliant Congress, Johnston wrote, “Corporations … lowered the portion of their profits that go to federal income taxes from 26 cents of each dollar in 1993 to 22 cents in 1998, even though the official corporate income tax remained unchanged at 35 percent.”

An example Johnston provides is that of Ingersoll-Rand, a company charged $27,653 per year by Bermuda for the use of a convenient tax headquarters. This, he says, “allowed the company to save $40 million in taxes to the United States the first year, an expected $60 million the second year, and even larger sums in the future.”

Hundreds of major corporations and tens of thousands of very wealthy individuals use perfectly legal tax-avoidance schemes to diminish their contributions to the operating costs of the United States.

We all pay the price for those untaxed profits. Johnston wrote, “Sometimes the price is paid in higher taxes. More often it is paid in fewer government services or by borrowing to maintain government services.”

The very wealthy are, mostly, solid Republicans who support their friend George Bush and the war he started. They just don’t want to help pay for it.

Certainly governments at every level spend some money unwisely or inefficiently. We need to address that lack of common sense in spending as well as the occasional pocket-lining.

But for wealthy corporations and individuals to seek means aggressively to diminish their contribution to the provision of government services, including national security, is reprehensible. As we file our tax returns, it’s a very good time to consider closing off the avenues used to escape paying their fair share.