$ 5,000 Flashlights: They’re Not Just for the Pentagon Anymore

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With last year’s tax cut leaving the budget surplus but a fond memory, the nation’s lawmakers are now scrambling for ways to supplement federal coffers. A logical place to start might be a crackdown on corporate tax trickery. In 2000 alone, according to a recent study conducted by two Florida International University researchers at the behest of Senator Byron Dorgan (D-ND), multinational corporations shirked more than $45 billion in U.S. taxes through an increasingly popular scheme known as transfer pricing.

The practice works something like this: The U.S. branch of a multinational imports goods from a foreign subsidiary at wildly inflated prices — say, $935 a pop for watch batteries. The U.S. arm might then export goods to its sister outfits offshore for drastically discounted prices — say, rocket launchers at $40 apiece. The net effect? The U.S. branch appears to bleed red ink, while the multinational parent rolls in profits safely out of Uncle Sam’s reach.

The examples of such “abnormal transactions” listed here are culled from Commerce Department trade data. (Note to the IRS: Enforcement might be easier if next time the department includes the names of the corporations involved.)

U.S. imports

Toothbrush: $5,655
Disposable razor blade: $461
Flashlight: $5,000
Vinyl record: $5,670
Ink-jet printer: $179,000

U.S. exports

Bulldozer: $528
Fine diamonds: $3/carat
Automatic teller machine: $36
Prefabricated metal building: 82 cents
Military aircraft: $20,000

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Which is also a pretty great way to describe Mother Jones' mission: People coming together around the truth to hold power accountable.

And right now, we need to raise about $400,000 from our online readers over the next two months to hit our annual goal and make good on that mission. Read more about the information war we find ourselves in and how people-powered, independent reporting can and must rise to the challenge—and please support our team's truth-telling journalism with a donation if you can right now.

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