GAO: Many Bailout Recipients Operating in Tax-Haven Countries
Jul 31, 2020215.1K Shares2.9M Views
Want to lower your taxes andmaybe get a bailout?
Incorporate.
The Government Accountability Office released a report today indicating that 83 of the 100 largest U.S. corporations — including many that are benefiting from Washington’s many taxpayer-funded bailouts — operate subsidiaries in countries known to be tax havens. Additionally, 63 of the 100 largest publicly-traded federal contractors have similar subsidiaries in the same spots, according to the report.
And that might not be all.
According to the GAO:
“„[T]he SEC only requires public corporations to report significant subsidiaries, so the number of subsidiaries in jurisdictions listed as tax havens or financial privacy jurisdictions for each corporation or federal contractor may be understated in this report.
Browsing the list of companies, you’ll find many of the same names we’ve heard in recent months connected to federal bailouts. For example, American International Group, which was bailed out last yearto the tune of roughly $150 billion, has 18 subsidiaries in eight tax-haven countries, including Bahrain, Switzerland and Bermuda, the GAO found.
Bank of America — which received a $138 billion lifeline today, on top of $15 billion it’s already received under the Wall Street bailout (not to mention $10 billion injected into Merrill Lynch ahead of its acquisition by BoA) — operates 115 subsidiaries in 11 tax-haven countries, including Gibraltar and the Cayman Islands.
The list goes on.
So what does it mean? Well, it appears that these corporations are begging for taxpayers to bail them out for the bad investment decisions they made, while at the same time skirting their tax obligations to the United States. (I say “appears” because the GAO concedes that subsidiaries may be established in listed jurisdictions for a variety of nontax business reasons.” Still, for what other reason would Citigroupcare to house operations on Aruba and the Isle of Man?).
Some lawmakers are asking the same question. Sens. Byron Dorgan (D-N.D.) and Carl Levin (D-Mich.), who requested the GAO report, plan to introduce legislation “to shut down these tax dodgers,” as Dorgan said in a statement:
“„This report shows that some of our country’s largest companies and federal contractors, many of which are household names, continue to use offshore tax havens to avoid paying their fair share of taxes to the U.S. And, some of those companies have even received emergency economic funds from the government.
The companies, in the past, have argued that the U.S. tax code is over-burdensome, forcing them to operate in tax havens to remain competitive. Levin points out that that’s not always the case:
“„[N]ot all large U.S. companies are major tax haven users and there is great contrast between competitors. For example, Pepsi has 70 tax haven subsidiaries, while Coca Cola has 8; Morgan Stanley has 273, while Fannie Mae has 0; and Caterpillar has 49, while Deere has 3.
The lawmakers estimate that tax shelters cost the federal Treasury $100 billion each year.
Rhyley Carney
Reviewer
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