Corning International, the company best known for its heat-resistant glass cookware, paid zero federal income taxes on nearly $1 billion in income last year, but apparently that was still too much. Testifying at a House Ways and Means Committee hearing on corporate tax policy on Friday, Corning vice-president Susan Ford asked Congress for "a substantial reduction" in Corning's corporate tax rate.
To be fair, Corning would pay Uncle Sam much more than nothing it didn't resort to arcane accounting maneuvers. Ford told members of Congress that Corning paid a 36 percent income tax last year, but what she didn't tell them is that Corning once again deferred its tax payments. According to the watchdog group Citizens for Tax Justice, Corning has paid zero taxes in the past four years. Between 2008 and 2010, a period in which Corning made $1.9 billion in U.S. profits, Corning actually received a $4 million tax refund.
The hearing on corporate tax policy comes at a time when the White House has proposed lowering corporate tax rates while closing tax loopholes, leveling the playing field for business. The changes are supposed to be revenue neutral, though Corning and other companies seem to want more. "American manufacturers are at a distinct disadvantage to competitors headquartered in other countries," Ford told members of Congress. "Specifically, foreign manufacturers uniformly face a lower corporate tax rate than U.S. manufacturers."
Except when they don't. In 2011, Corning paid an average foreign tax rate of 17 percent—far more than what it paid in the United States.
Mitt Romney isn't alone. The world's wealthiest citizens have socked away a mind-blowing amount of money in offshore tax havens: Likely around $21 trillion, but as much as $32 trillion. That's according to a new report from the Tax Justice Network, a British think tank. To put that in perspective, the combined gross domestic products of the United States and Japan are around $21 trillion.
This gargantuan stash of money belongs to fewer than 10 million people, and $9.8 trillion of it belongs to just 100,000 people, the Tax Justice Network estimates. Here are the countries that are losing the most money to offshore tax havens:*
While offshore tax havens have an image of being operated by shady banks in tropical backwaters, the report found that the majority of the $21 trillion was actually managed by well-known private banks. The three largest tax haven players are UBS, Credit Suisse, and Goldman Sachs. For more on the Tax Justice Network's findings, you can read their full report (PDF).
Correction: The original version of this article stated that the countries in the chart were the top offshore destinations for tax dodgers. In reality, they are the top sources of money sent to offshore accounts in places like the Cayman Islands.
While most Americans don't object to Obama's plan to raise taxes on the wealthy, they're less excited about raising them for family-owned barbershops and ice cream parlors. This may be why Mitt Romney often claims that collecting more taxes from high earners would hurt mom-and-pop employers whose profits are taxed as individual income. "This is a direct attack on small business," he declared at a recent campaign stop in Virginia. His argument has the support of a powerful ally: the National Federation of Independent Businesses (NFIB), a "nonpartisan" small-business advocacy group that has put defending the Bush tax cuts for the richest of the rich near the top of its political agenda.
Often cited as the leading voice of small business, the NFIB was founded in 1943 by a former US Chamber of Commerce staffer who thought that business groups were neglecting the little guys. Today it claims 350,000 members, chapters in all 50 states, and a $95 million budget. In May, the Washington Postcited the NFIB to back up Romney's attacks on Obama's tax plan, reporting that the group had given an F to the portion of Obama's budget that deals with taxing the wealthy.
The recession has devastated the finances of many Americans, but it has been very good to the Walton family. Since 2007, Walmart stores have been flooded with millions of folks who've lost their shirts in the housing bust, stock market crash, and stalled job market—people who can no longer afford to buy anything that isn't made in China and sold by someone making close to minimum wage. Using newly released data from the Federal Reserve's Survey of Consumer Finances (listed as "SCF" below), labor economist Sylvia Allegretto has put together this chart on the diverging fortunes of the Waltons and their customers:
As Josh Bivens of the Economic Policy Insitute points out, the six Walmart heirs now have more wealth than the bottom 42 percent of Americans combined, up from 30 percent in 2007. Between 2007 and 2010, the collective wealth of the six richest Waltons rose from $73 billion to $90 billion, while the wealth of the average American declined from $126,000 to $77,000 (13 million Americans have negative net worth). Here's a chart of how many average Americans it has taken over time to equal the wealth of the Waltons:
It may be no accident that rising income inequality in America since the 1970s has coincided with Walmart's meteoric expansion:
When things heat up in the Empire State, many of our nation's rulers join the Summer Colony, what Hamptonites call the influx of plutocrats and assorted helpers who seasonally fill the island's beach chalets. Escaping nearby Manhattan's heat and noise for a few months each year is one of the 1 percent's most cherished membership perks, but it may be going the way of groundskeeping graveyard shifts at The Creeks.* A growing class of Hamptonian super-rich now insist on commuting to their tranquil getaways by helicopter, thereby disrupting the peace of anyone beneath their flight paths. Hamptons' resident Frank Dalene, a founding member of the Quiet Skies Coalition, says billionaire industrialist Ira Rennert is the worst offender. Here's a video he recorded of Rennert's Sikorsky S-92 and other noisy choppers buzzing the roof of his home:
For more on Hamptons helicopter feud, read my story from the July/August issue.
*According to the book "Philistines at the Hedgerow," the previous owners of The Creeks, Albert and Adele Herter, employed gardeners who worked at night so as not to disturb the Herters during the day.