10 Filthy-Rich, Tax-Dodging Hypocrites Pushing Disastrous Austerity on America
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7. Arne Sorenson, Marriott International
In 2009, the U.S. Department of Justice prosecuted Marriott International for using an illegal tax shelter swindle dubbed “ Son of Boss.” The scam involved setting up a series of complex paper transactions between company subsidiaries to create $70 million in fake losses that could be offset against Marriott’s real profits. Presidential candidate Mitt Romney, a long-time friend of the Marriott family and named after Marriott’s patriarch J. Willard Marriott, was the head of the hotel giant’s audit committee in 1994 at the time the board first approved the Son of Boss transaction. According to Bloomberg, Marriott has also shifted profits to a Luxembourg shell company and avoided hundreds of millions of dollars in taxes through one federal tax credit for so-called synthetic fuel that Senator John McCain dubbed an “expensive hoax.”
8. Alexander Cutler, Eaton Corporation
Less than two years after accepting $90 million in taxpayer-financed subsidies to locate a new world headquarters in the suburbs of Cleveland, Eaton Corporation announced that it would be moving its headquarters and reincorporating as an Irish company. The move is part of a merger deal with Cooper Industries, another Fix the Debt coalition member. The two companies boast that Eaton’s departure after 100 years in Cleveland will cut their tax bill by $160 million. Meanwhile, Eaton is fighting a $75 million bill from the IRS for back taxes and penalties related to alleged violations of transfer pricing agreements.
9. Lowell McAdam, Verizon
Verizon is one of 30 companies identified by Citizens for Tax Justice as having paid “less than nothing” in federal income taxes over the entire 2008-10 period. Despite earning $32.5 billion in profits during these three years, the firm got so much in tax subsidies that they wound up with a net tax refund of $951 million. That works out to a tax rate of negative 2.9%. In effect, every Verizon phone customer paid more in federal telephone excise taxes than Verizon paid in federal income taxes.
10. Steve Ballmer, Microsoft
A recent Senate investigation exposed how Microsoft has used Olympic class accounting acrobatics to avoid paying taxes. Specifically, the Senate Permanent Subcommittee on Investigations charged that the software giant had devised a complicated transfer pricing agreement with a subsidiary in Puerto Rico to lower its tax bill on goods sold in the U.S. market by as much as $4.5 billion from 2009 to 2011. The investigation also accused Microsoft of avoiding billions in U.S. corporate income taxes by shifting royalty revenue to low-tax jurisdictions. Subcommittee Chair Carl Levin described Microsoft’s strategies as “tax alchemy, featuring structures and transactions that require a suspension of disbelief to be accepted.” Such alchemy, while not illegal, is a major contributor to the national debt.
Sanders to CEOs: Look in the Mirror
When Fix the Debt launched their 80 CEO-strong coalition on October 25, Senator Bernie Sanders responded by stating, “Before telling us why we should cut Social Security, Medicare and other vitally important programs, these CEOs might want to take a hard look at their responsibility for causing the deficit and this terrible recession.”
Instead, the Fix the Debt coalition members are portraying themselves as the honorable ones who are brave enough to push the tough austerity medicine that is the only remedy for our fiscal ills. Nonsense. We are the richest nation in the history of the world. Our problem is that too much of our wealth is going into the coffers of rich individuals and corporations and to pay for misguided wars.
There are numerous budget plans by Senator Sanders, the Congressional Progressive Caucus, and others that would get us on the right track. At the Institute for Policy Studies, we’ve identified a dozen policies that would collectively raise trillions of dollars to in ways that would not only address the fiscal challenge but help make our economy more equitable, green, and secure. The report also points out that until we recover from the current unemployment crisis, we should not be contemplating any spending cuts that could deepen the crisis.