In response to public outrage, congressional Democrats are clamoring for a crackdown on offshore tax dodges. They've focused particularly on the notorious Bermuda loophole, whereby unpatriotic companies such as Tyco, Stanley Works, Accenture (formerly Andersen Consulting) and PricewaterhouseCoopers Consulting have or plan to set up mail drops in Bermuda to avoid taxes on their U.S. profits.
Sensing the public mood, Bill Thomas, the California Republican who chairs the Committee to Bankrupt America (formerly the House Ways and Means Committee), says Republicans also want to address the problem. But while the gop bill offers lip service to halting multinational tax abuses, it consists mainly of measures that go in exactly the opposite direction.
Late in the fall of 1999, presidential candidate George W. Bush began talking up the idea of investing the Social Security Trust Fund in the stock market. What would have happened if his wish had immediately come true?
Bush's idea was -- and apparently still is -- that invested in stocks, Social Security could earn such a high rate of return that all of the program's long-term financial problems would be solved. As he put it on Meet the Press on Nov. 21, 1999, shifting toward personal stock-market investment accounts was necessary "in order to make sure there are benefits available in the long term."
Suppose you're a governor and your staff has just informed you that most of the biggest corporations doing business in your state have cooked their books so severely that they pay virtually nothing in state income taxes. Do you holler, "Hallelujah! Hunt 'em up and have 'em over for a campaign fundraiser!"? Well, that would be one common reaction. But it's not how newly elected New Jersey Gov. Jim McGreevey responded this year.
You can hardly pick up the newspaper these days without reading about some freshly discovered corporate tax shelter scam, whether it's an Enron-style tax-haven subsidiary or a Bermuda shell company. The Bush administration and House Republicans, who generally support these kinds of tax abuses, have been in full stall mode, hoping to ride out the storm of public outrage without having to take serious action.
Recognizing that an informed public generally likes progressive taxes, Republicans prefer to lie about the impact of their tax ideas. Take, for example, Arizona Senator Jon Kyl, who recently claimed that the federal estate tax on the largest 2 percent of estates isn't paid by rich "fat cats," it's paid by "schoolteachers...airline pilots...and mechanics." Or President George W. Bush, who insisted that his tax cuts for the rich will mainly reduce taxes for single mothers making $22,000 a year. Or House Majority Leader Dick Armey of Texas, who boldly asserts that his proposal for a flat-rate wage tax, exempting all capital income, is "fair" and "progressive."