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About The skanner. (Portland, Or.) 1975-2014 | View Entire Issue (June 22, 2011)
opinion Avoiding Taxes Like Big Corporations “challenging People to Shape a better Future Now” b ErNIE F oStEr Founder/Publisher b obbIE D orE F oStEr executive editor t ED b aNkS advertising Manager J ErrY F oStEr account executive l ISa l ovINg news editor b rIaN S tIMSoN reporter D avID k IDD graphic Designer M oNIca J. F oStEr Seattle office Coordinator J ulIE k EEFE S uSaN F rIED Photographers The Skanner Newspaper, established in October 1975, is a weekly publica- tion, published each Wednesday by IMM Publications Inc., 415 N. Killingsworth St., P.O. Box 5455, Portland, OR 97228. Telephone (503) 285-5555. E-mail: info@theskanner.com World Wide Web site: http://www.theskanner.com Fax: (503) 285-2900 the Skanner is a member of the National Newspaper Pub lishers Association and West Coast Black Pub - lishers Association. All photos submitted become the property of the Skanner. We are not re - spon sible for lost or damaged photos either solicited or unsolicited. © 2011 the Skanner. ALL RIGHTS RE SERVED. REPRODUCTION IN WHOLE OR IN PART WITHOUT PERMISSION PROHIBITED. knowing What’s Important can change Your life! Subscribe to The Skanner – don’t miss an issue! Please sign me up for: q 1 year $74 q 2 year $140 q New Subscription q Renewal ________________________ Name _________________ address _________________ city _________________ State ______ zIP ________ Phone Mail with check or money order to: The Skanner P.O. Box 5455 Portland, OR 97228 I ’m an accountant. My college degrees and CPA license are the intellectual properties that enable me to earn a living. Now suppose that I formed a corpora- tion to deliver my services, then took my diplomas and license off my wall and placed them in a safe deposit box in a Luxembourg bank. When clients came to my Oregon office, I would explain that the value of my services was represented by the diplomas and license now held in the offshore bank, and they should send their payment to my corporation housed at a PO Box in Luxembourg. Using this little accounting trick, I would be able to avoid paying U.S. taxes, until I brought those “foreign” funds back to the United States. If I spun this ludicrous tale to my clients, I expect most of them would leave my practice immedi- ately and find a different account- ant. But this accounting acrobatics is exactly the sort of transaction that hundreds of U.S. multinational corporations use to avoid paying billions of dollars annually in U.S. corporate income taxes. Technology, pharmaceutical and entertainment corporations, whose profits depend heavily on patents, trademarks and copyrights, have aggressively shifted profits from the United States, to one of dozens of tax havens that charge little or no taxes. Bloomberg Business Week recently illustrated examples of this tax avoiding behavior: Forest Laboratories “sells nearly 100 per- cent of its drugs in the U.S. – and cuts its U.S. taxes dramatically by attributing the bulk of its profits to t rI l IbrIuM Brian Seltzer a law office in Bermuda. … Google reduced its income taxes by $3.1 billion over three years by shifting income to Ireland, then the Netherlands, and ultimately to Bermuda.” These tax avoiding strategies cost the U.S. Treasury more than $100 billion a year. And they have led to more than $1.2 trillion in 35% corporate income tax that would otherwise be owed. The coalition calls itself WIN America, but the numbers involved in the corporate tax holi- day mean a real loss for America. The Congressional Joint Committee on Taxation has calcu- lated this tax windfall would cost $80 billion, money that would be made up with higher taxes on small business people like me, or through reduced government serv- ices and infrastructure upon which all businesses, communities and These tax avoiding strategies cost the U.S. Treasury more than $100 billion a year liquid assets being stashed off- shore by U.S. corporations. A new coalition of corporate tax avoiders including Google, Apple Computer, Pfizer, Duke Energy families depend. Tax amnesty programs are noth- ing new. The IRS has a couple of times allowed individual taxpay- ers to declare hidden offshore Creating an incentive for such anti- social behavior through preferential tax rates will only serve to accelerate the offshoring of U.S. profits through fictional transactions and an array of industry trade groups are demanding that Congress pass a special tax break that would reward these tax avoiders who “repatriate,” or bring back their offshore stash to the U.S., with a 5.25% tax rate, not the assets and pay both the full tax due and penalties in exchange for avoiding prosecution and possible jail time. While much corporate tax-dodging through the use of tax havens is neither hidden, nor ille- gal under current law favoring U.S. multinationals, it wholly stems from corporations who engage in these transactions for the principle purpose of shifting profits between countries in order to avoid taxes. Creating an incen- tive for such anti-social behavior through preferential tax rates will only serve to accelerate the off- shoring of U.S. profits through fic- tional transactions. Indeed, this is exactly what hap- pened in 2004, when Congress enacted the American Jobs Creation Act, a bill which prom- ised that a 5.25% tax rate would bring home billions of dollars that supporters claimed would be rein- vested to create American jobs. The promise never materialized; most of the funds went instead to boost shareholder dividends and stock buybacks. Many of the biggest beneficiaries of the tax break, including Pfizer, Honeywell, and Hewlett Packard, laid off thousands of workers just months after receiving their tax windfall. That tax holiday, and the promise of another, has dramati- cally accelerated the amount of U.S. profits shifted offshore. All of my education took place in the United States, as do all of my client meetings. The vast majority of Americans find it right and logical that I have a duty to pay taxes in the U.S. It is time that the same logic applies to multina- tional corporations, and that we stop accepting fairy tales about patents and trademarks held in some far-away bank vault. Setzler is President and founder of trilibrium, a public accounting and business advisory firm located in Portland, or Drug Policies Have Led to Broken Prisons I f there was any doubt about the broken state of our prison sys- tem, the news this week should put it to rest. The Global Commission on Drug Policy, made up of former presidents and other luminaries from the United States and abroad, concludes that the Drug War is an expensive failure. The California prison system—which the U.S. Supreme Court declared to be in violation of the 8th Amendment due to overcrowding and neg- lect—has yet to develop a plan to bring it into compliance with the court order. Less well publicized, but also disturbing, is a letter from Tom Lutz in which he resigns from his post as department chair at the University of California Riverside. Lutz warns that the state is dis- mantling in just a few years a world-class system of higher edu- cation. Funding has shifted dra- matically from educating California’s young to imprisoning them—not a way to build a strong country. Meanwhile, massive state budg- et deficits are worsened by the expense of locking up more of our own citizens than any other coun- try in the world. Perhaps we’re finally ready for a reassessment. What might a more effective and rational system look like? Page 4 The Portland Skanner June 22, 2011 YES! M agazINE Sarah van Gelder People behind bars for drug pos- session make up the greatest share of the massive uptick in the prison population. The experts we talked to, including a former police chief and a medical doctor who special- izes in addiction, called for an end to the war on drugs. Instead of punishing drug addicts—many of whom are victims of trauma— treatment, needle exchanges, and safe housing lessen addiction, dis- skills training in businesses run by ex-inmates and addicts, and their success record is impressive. Traditional approaches to crime hold special promise. In New Zealand, instead of locking up young offenders, a council made up of family, community mem- bers, and crime victims holds them accountable for their crimes, and then gives them an opportunity to make restitution and be reintegrat- ed into the community. This approach, which borrows from the Maori people, has become the norm in New Zealand, reducing to almost zero the number of young Funding has shifted dramatically from educating California’s young to imprisoning them ease, and the crimes caused by drug use. Most of the 2.3 million now in prison will eventually be released. Education and job training are proven ways to reduce the number who reoffend and return to prison. Ex-offenders and ex-addicts can be the best mentors of those released from prison; the Delancey Street Project, for exam- ple, offers peer support and job- people locked up in expensive and violent detention facilities. This “restorative justice” approach is spreading. Studies show crime victims who are involved in victim-offender medi- ation processes are less likely to experience long-term post-trau- matic stress. The involvement of the broader community is key to the success of restorative approaches. A welding instructor who volunteers to instruct inmates, a Girl Scout leader who brings girls to visit their imprisoned mothers, or a gar- den club that helps inmates start prison gardens all do their part to create vital links to the outside. There are people we might agree should be locked up: psychopathic killers, rapists, and others who endanger their families or commu- nities. But most of those in prison are people with few resources who have committed nonviolent offenses—especially poor people, people of color, drug users, alco- holics, and the mentally chal- lenged. Imprisoning millions of these people does not make us safer. But imprisoning 2.3 million people does deplete government coffers resulting in massive cuts in programs—like California’s sys- tem of higher education—that have proven track records for reducing crime. A smarter and more compassion- ate criminal justice system could not only save lives and restore communities especially hard hit by imprisonments, it could save us from fiscal meltdown. Sarah van gelder is executive editor of YeS! Magazine and yesmagazine.org. the Summer 2011 issue of YeS! Magazine is “Beyond Prisons.”
