To follow up on Tim's post below: One complaint conservatives often make about American tax rates is that the corporate rate is so high (35 percent) that it prevents investment and destroys jobs. Liberals counter that 35 percent may be the nominal rate, but once corporations are done exploiting all the loopholes, they don't pay anything near that. In fact, many don't pay anything at all. Let's take General Electric -- they made $10.3 billion in profits in 2009, and how much did they pay in taxes? Nothing. Or rather, you paid them -- they got a $1.1 billion rebate from the IRS. ExxonMobil, which made a profit of $45.2 billion, paid taxes in other countries, but not a penny to Uncle Sam (read more here).
But before you start thinking that it's just oil companies, defense contractors, and other corporate meanies who demonstrate this lack of patriotism, take a look at who else does it:
Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.
Google’s income shifting -- involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” -- helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.
You see, much of Google's income goes on a magical journey from Silicon Valley over to Ireland, where it is kissed by a leprechaun, after which it travels to the Netherlands, and then shuffles over to Bermuda, where it sips a tropical drink on the beach before coming back to the U.S., unburdened by taxes. Here's a graphic that explains how it works.
Don't you wish you could do that with your income?
-- Paul Waldman
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