[To see the Paul Ryan 'Tax Shelter USA' video, go to the
Mother Jones article below, or view it on YouTube at
http://www.youtube.com/watch?v=AKo2t_W_uT4 -- moderator.]

Paul Ryan: "Let's Make This Country a Tax Shelter"

     After calling the Cayman Islands "the place where
     you hide your money," Ryan said we should make the
     United States more like that notorious tax haven.

By Nick Baumann and Brett Brownell 
Fri Oct. 5, 2012 
http://www.motherjones.com/politics/2012/10/paul-ryan-lets-make-country-tax-shelter-video

In 2010, Rep. Paul Ryan (R-Wis.), now Mitt Romney's
running mate, called the Cayman Islands "the place you
hide your money," arguing that the United States needs
to slash tax rates below those of other countries in
order to make this country "a haven for capital
formation." But in previously unreported comments, from
an interview with American Business Magazine in August
2011, Ryan went even further on the same topic, saying,
"let's make this country a tax shelter for other
countries instead of having other countries be a tax
shelter for America."

Romney has been criticized for his use of controversial
tax techniques and overseas investment vehicles,
including some in the Caymans—where he has at least $30
million in assets—and other well known tax havens.
Here's how one expert described tax haven countries to
our colleague Stephanie Mencimer:

     James Henry, a former chief economist at McKinsey &
     Co., describes offshore tax havens like the "bar
     scene in Star Wars." He explains, "Dictators and
     kleptocrats used them to conceal stolen loot. Arms
     dealers and drug dealers use them to launder their
     deals. Google and Apple and Pfizer use them to park
     their intellectual property and pay themselves tax-
     free royalties. Banks use them to park lousy loans
     and stash the offshore accounts and assets under
     management of their wealthy individual clients,
     many of which are paying zero taxes back home…And
     so on."

Here's the transcript of the full Ryan interview; the
"tax shelter" line, which was pointed out to Mother
Jones by a tipster, begins at 18:22 in the full video,
which you can see here. You can also jump down to the
full Q&A.

As you can see in the charts below, the United States
already raises significantly less money (as a percentage
of GDP) from corporate taxes than most other first-world
nations, and although corporate tax rates are high here,
corporations' effective tax rates—what they actually
pay—are lower than those in most other first-world
economies.


The United States' reliance on corporate taxes has
fallen dramatically over the last 60 years. In 1952, the
government got over 30 percent of its revenue from
corporate taxes; today, that number is less than 10
percent. Many big companies, including Boeing, General
Electric, and Verizon, had negative effective tax rates
between 2008 and 2011, despite raking in billions of
dollars of profits.

Parts of the United States are already effectively
global tax shelters. Delaware, which has very lax
business formation requirements and disclosure rules, as
well as low corporate taxes, "today regularly tops lists
of domestic and foreign tax havens," according to the
New York Times. (Multiple entities associated with
Romney and Bain Capital, the private equity firm he
founded, were established in Delaware.) The Times'
Leslie Wayne has more:

     "What is so galling about secrecy in the United
     States is that there is no attempt to document who
     owns a corporation," said Richard Murphy, a senior
     adviser at the Tax Justice Network, an independent
     organization based in London that researches tax
     havens. "Two million corporations are formed each
     year in the United States, more than anywhere else
     in the world. Delaware, in turn, is the biggest
     single source of anonymous corporations in the
     world."

     Mr. Murphy adds: "Why go to the Caymans when you
     can just go down the street?"

     In 2009, the Tax Justice Network named the United
     States as No. 1 on its Financial Secrecy Index,
     ahead of Luxembourg and Switzerland. It cited
     Delaware as one of the reasons.

     That, Mr. Murphy says, elicited howls in
     Wilmington. "The reaction was: 'This cannot be
     true.' Not only can it be true, it is true." (The
     United States has since fallen to fifth place,
     behind Switzerland, the Caymans, Luxembourg and
     Hong Kong, after the group changed its method.)

     […]

     Delaware subsidiaries are especially popular with
     global energy and mining companies like Exxon,
     Chevron and Rio Tinto. Among the top 10, some 915
     subsidiaries have been set up in Delaware, compared
     with 51 in Switzerland and 49 in the Caymans,
     according to a report last September by the Norway
     chapter of Publish What You Pay, a London-based
     group that studies natural resources. The study
     said that this allows these resource extraction
     companies to put up a "wall of silence" about their
     far-flung operations and profits, especially from
     poor countries that may want a greater slice of the
     revenue. Exxon, Chevron and Rio Tinto declined to
     comment.

So, to review: The United States already collects
comparatively low amounts of corporate tax. But Ryan
wants to make the whole country like Delaware. He says
this "would ultimately raise revenues and promote
economic growth." But if the US lowers its rates,
there's nothing to stop other countries—including the
Caymans and Switzerland—from slashing their taxes and
fees and making their restrictions on corporations even
lower, too.

Here's ABM's question and Ryan's full answer:

     ABM: What would you do to limit or slow the
     migration of domestic business overseas?

     PR: I would go to a territorial tax system. We
     should make the top American tax rate 25 percent
     for individuals and businesses. As you know, all
     the partnerships and LLCs are taxed at the
     individual rate. What the past Republican budget
     says is bring those tax rates down to 25 percent on
     the corporate side, as well. I think we’re shooting
     ourselves in the foot the way we tax ourselves. The
     rest of the world has moved toward a territorial
     system and we have not.

     I just met with the chief of staff to the Council
     in Britain who stated not only have they just moved
     to a territorial system, they’re moving their top
     tax rate on businesses down to 23 percent. Ireland
     is at 12.5 percent. The international average
     corporate tax rate is 25 percent. We are the
     highest now at 35 percent. So, we are, literally,
     pushing capital overseas. Corporations are looking
     overseas and the US government is making it
     impossible for them to come back with their
     capital. That’s giving an incentive to keep capital
     overseas, not to domicile your company here, and
     we’re making ourselves ripe for takeover targets.
     Foreign companies are taking over US companies.
     This is occurring at an alarming pace—eventually
     the loyalties of these corporations will leave, as
     well.

     I think we need to have a tax system that makes
     America a haven for capital formation. Let’s make
     this country a tax shelter for other countries
     instead of having other countries be a tax shelter
     for America. This would ultimately raise revenues
     and promote economic growth.

     The way we should look at increasing revenues to
     the government should not be class warfare or a
     bigger than ever tax increase approach. Economic
     growth comes from job creation and better economic
     growth policies that raise revenue through higher
     growth. Lowering tax rates at a broader base of
     income brings in more revenues and would help us
     close our fiscal gap.

___________________________________________

Portside aims to provide material of interest to people
on the left that will help them to interpret the world
and to change it.

Submit via email: [log in to unmask]

Submit via the Web: http://portside.org/submittous3

Frequently asked questions: http://portside.org/faq

Sub/Unsub: http://portside.org/subscribe-and-unsubscribe

Search Portside archives: http://portside.org/archive

Contribute to Portside: https://portside.org/donate