Down the Tax Shelters
across corporate America, high-priced accountants are hard
at work helping companies avoid billions in taxes by hiding
profits in a host of tax-sheltering schemes. No summer vacation
at the beach reading trashy actuarial tables for these guys.
And they’re doing a bang-up job: Corporations are currently
turning over 30 percent less of their profits to the taxman
than they did 20 years ago.
Meanwhile, all across the country, state governments, facing
the biggest budget crisis since the Great Depression, are
being forced to slash programs and cut services.
Gee, do you think there might be a connection? You can bet
your vanishing after-school care, Prenatal health program,
and local law enforcement service there is.
According to a new study released last week by the Multistate
Tax Commission, a nonpartisan coalition of state taxing authorities,
corporate tax shelters robbed states of $12.4 billion in desperately
needed revenues in 2001—a figure that represents more than
a third of the money corporations rightfully owed.
Companies sheltering their assets overseas are draining another
$70 billion a year from the federal Treasury—funds that often
make their way back to states through programs such as Head
Start and AmeriCorps.
But as damning as those statistics are, they’re still just
abstract figures. In order to really understand the devastating
impact these lost revenues are having, we need to put flesh
and bone to the numbers.
Take California: According to the Multistate Tax Commission,
the Golden State lost an estimated $1.34 billion in corporate
tax revenue because of tax shelters. Now that might not seem
like that much money to a state facing an elephantine $38-billion
budget deficit, but it means very specific cuts to very specific
programs that affect hundreds of thousands of people.
For example, just $520 million of the $1.34 billion the tax
dodgers kept for themselves would make it possible for the
state to avoid the closure of—or severe cost cutting at—250
to 350 nursing homes. Just $380 million would prevent the
loss of child-care and day-care services for 429,000 children.
And just $600 million would make it unnecessary to up the
entry age for kindergartners—a change that will keep 110,000
children from starting school in the fall. But because of
the tax shelterers’ greed, those dark clouds are gathering
on the California horizon.
Chew on that for a second. Thanks to California’s corporate
tax cheats, thousands of elderly nursing home residents are
facing the prospect of being tossed out on the street. Maybe
the high-powered corporate numbers-crunchers can take a break
from devising ways to bilk the taxman and figure out, pro
bono, how the state’s nursing-home operators are supposed
to cut corners and still protect the health and well-being
of those in their care. Feed their elderly charges less often?
Substitute sugar pills for life-sustaining medication? Fill
their oxygen tanks with helium?
And what about those 110,000 California kids who may have
to put their education on hold for another year? What are
we supposed to tell them: “Hey, who needs kindergarten when
you’ve got Sponge Bob Squarepants?”
Need more evidence of the difference this lost revenue would
make? Consider that just $18 million of the lost $1.34 billion
(only 1.3 percent of the total skimmed) would allow California
officials to fully fund the California Arts Council, the 27-year
old agency that brings artists, writers, and performers into
the state’s public schools. Artists like poet Dana Lomax,
who inspires low-income elementary school students to believe
that “Imagination can take you anywhere,” or actress Jill
Holden, who conducts workshops at treatment centers for abused
and neglected kids. Instead, the Arts Council is on the budget
chopping block. Thanks, corporate tax crooks!
And the same sort of pain being felt in California is being
meted out all across the country, with beleaguered state legislatures
forced to cut programs and eliminate services that could easily
have been funded by lost revenues.
In Florida, which lost $554 million to tax shelters in 2001,
just $7.7 million would have saved a program that provided
glasses and hearing aids for low-income people.
In Oregon, which is dealing with $80 million in lost corporate
taxes, $14.5 million would have prevented the 19,000- student
Hillsboro school district from shutting its doors 17 days
early this year.
In South Carolina, which also was denied $80 million because
of tax shelters, a mere $1.4 million would have stopped the
round of budget cuts that cost Traci Young Cooper, the state’s
2001 Teacher of the Year, her job. The honor earned her a
trip to the White House to meet President Bush; maybe if she
knew what was coming she could have lobbied him to make all
tax shelters illegal.
In Kentucky, which lost $150 million to tax shelters, $2.6
million would have allowed Gov. Paul Patton to leave behind
bars the 883 prison inmates he released early in a desperate
effort to balance the state’s budget. I have a sneaking suspicion
that the 25-year-old woman who was raped by one of these freed
inmates just three days after his release would consider that
$2.6 million money very well spent.
And the list goes on and on. Vital programs and services cut
or eliminated that could have been saved had corporate America
just done the right thing and paid what it owed.
It’s time for the IRS to stop coddling corporate crooks and
start going after tax- shelter thieves with a vengeance. To
do any less is a slap in the face of all the hard-working
taxpayers who, however grudgingly, pay their fair share.
Wealthy corporations absolutely must be forced to do the same.
Because in the end, it’s not the big, bad taxman these corporate
tax cheats are pulling a fast one on. It’s you and me.