Kilroy Was Here
February 13, 2003
Corporate Weasel Watch: Enron
When the Income Tax was first proposed, it was proposed as a 2% tax on those making more than $10,000 a year. When confronted with this, Presidential-candidate William Jennings Bryant said something along the lines of, "You know, I've said bad things about people, but I've never said something so bad as a man's patriotism only went 2% deep."
Yet here we are with the major corporations of this country doing everything they can to avoid their patriotic duty and help support the very government that enables their wealth. Enron is the latest in a long line of corporations that avoid their patriotic duty at the expense of their tax payers. The New York Times today cites a new report given to Congress:
"The report paints quite a shocking picture of Enron's tax gimmicks and structured transactions and executive compensation," Mr. Baucus said. "Bad as Enron is going to come out, the deeper concern is this is just not Enron alone. It involves lots of other companies and how they inundated the I.R.S., out-complexed the I.R.S. The I.R.S. just cannot handle the complexity of some of these transactions."
Enron created 881 offshore subsidiaries, 692 of them in the Cayman Islands, as part of its strategy to avoid taxes.
Shame on these corporations who use the loopholes to avoid doing their fair share. But the real devil in this is the large accounting firms that enable this type of behavior.
Tax shelters are sold primarily to the very biggest companies because they can pay the largest fees to the accounting and law firms and investment houses that design them and sell them on the condition of confidentiality. The I.R.S. has stepped up efforts to find tax shelters, but the agency lacks the resources to address the problem fully, Charles O. Rossotti, the former I.R.S. commissioner, warned last fall in his final report to his oversight board.
Well, you may think that Enron is the primary offender and that we're getting them. But check out this frightening statistic from the same New York article:
The 10,000 or so largest companies paid 20.3 percent of their 1999 profits in federal income taxes, while the next tier of companies paid at a 30.9 percent rate, according to an I.R.S. analysis of corporate tax returns for the year. The largest companies had 26 times the profits of the second tier of companies, which paid income taxes at a rate 50 percent higher than the largest companies, the I.R.S. data shows.
It's disheartening to find out how shallow these people's patriotism actually is.
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