After Wall Street drove this country into recession, the top financial institutions in the United States took every advantage of being American. They just loved their country and Americans’ willingness to provide them with the largest bailout in history. In 2008, Congress approved a $700 billion gift to Wall Street. Another $16 trillion came from the Federal Reserve. America. What a great country.
Just two years later, the same banks were back making record-breaking profits. Suddenly they lost their love for America. They did all they could to avoid paying U.S. taxes by establishing shell corporations in tax havens.
In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands to avoid paying U.S. taxes. Not only did the bank avoid federal income taxes, it received an IRS rebate worth $1.9 billion. That same year, JP Morgan Chase took advantage of tax havens to avoid some $4.9 billion in U.S. taxes. Goldman Sachs avoided about $3.3 billion in U.S. taxes. Citigroup, after taking $2.5 trillion from the Federal Reserve during the financial crisis, paid no U.S. income taxes for the last four years after. On and on it goes.
Offshore tax abuse is not just limited to Wall Street. Each and every year corporations and the wealthy are avoiding more than $100 billion in U.S. taxes by sheltering their income offshore. Pharmaceutical companies like Eli Lilly and Pfizer have fought to make it illegal for the American people to buy cheaper prescription drugs from Canada and Europe, but they shift drug patents and profits to the Netherlands and other offshore tax havens to avoid paying U.S. taxes.
Apple wants all of the advantages of being an American company, but it doesn’t want to pay American taxes or American wages. It creates the iPad, iPhone, iPod and iTunes in the United States, but manufactures most of its products in low-wage China. Then it shifts most of its profits to Ireland, Luxembourg, the British Virgin Islands and other tax havens to avoid paying U.S. taxes. Without such maneuvers, Apple’s U.S. tax bill would have been $2.4 billion greater in 2011.
Offshore tax schemes have become so absurd that one five-story office building in the Cayman Islands is now the "home" to more than 18,000 corporations.
At a time when we have a $16.5 trillion national debt; at a time when roughly one-quarter of the largest corporations in America are paying no federal income taxes; and at a time when corporate profits are at an all-time high; it is past time for Wall Street and corporate America to pay their fair share.
That’s what the Corporate Tax Dodging Prevention Act that I have introduced with Rep. Jan Schakowsky (D-Ill.) is all about. Our legislation would stop profitable Wall Street banks and corporations from sheltering profits offshore tax havens and stop rewarding companies that ship jobs and factories overseas. The Joint Committee on Taxation has estimated that this bill would raise more than $590 billion over the next decade.
As Congress debates deficit reduction, my Republican colleagues want to balance the budget on the backs of the elderly, the sick, the children, the veterans and the most vulnerable by making massive cuts. We have a better idea. Wall Street and the largest corporations in the country must begin to pay their fair share of taxes. They must not be able to continue hiding their profits offshore and shipping American jobs overseas to avoid taxes.
You can’t be an American company only when you want a massive bailout from the American people. It Wall Street and corporate America don’t agree, the next time they need a bailout let them go to the Cayman Islands.
Bernie Sanders is the junior U.S. Senator from Vermont.