Are You With America or the Cayman Islands?

Are You With America or the Cayman Islands?

How the Cayman Islands and other tax havens save the rich billions, and screw the rest of us

By Bernie Sanders, Reader Supported News

When the greed, recklessness, and illegal behavior on Wall Street drove this country into the deepest recession since the 1930s, the largest financial institutions in the United States took every advantage of being American. They just loved their country – and the willingness of the American people to provide them with the largest bailout in world history. In 2008, Congress approved a $700 billion gift to Wall Street. Another $16 trillion in virtually zero interest loans and other financial assistance came from the Federal Reserve. America. What a great country.

Bernie Sanders, cayman islands
Sen. Bernie Sanders gestures as he speaks at the California Democrats State Convention. (photo: AP)

But just two years later, as soon as these giant financial institutions started making record-breaking profits again, they suddenly lost their love for their native country. At a time when the nation was suffering from a huge deficit, largely created by the recession that Wall Street caused, the major financial institutions did everything they could to avoid paying American taxes by establishing shell corporations in the Cayman Islands and other tax havens.

In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis.

On and on it goes. Wall Street banks and large companies love America when they need corporate welfare. But when it comes to paying American taxes or American wages, they want nothing to do with this country. That has got to change.

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, during tax season, Eli Lilly and Pfizer 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, the iPhone, the iPod, and iTunes in the United States, but manufactures most of its products in China so it doesn’t have to pay American wages. 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 federal tax bill in the United States would have been $2.4 billion higher 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.

This tax avoidance does not just reduce the revenue that we need to pay for education, healthcare, roads, and environmental protection, it is also costing us millions of American jobs. Today, companies are using these same tax schemes to lower their tax bills by shipping American jobs and factories abroad. These tax breaks have contributed to the loss of more than 5 million U.S. manufacturing jobs and the closure of more than 56,000 factories since 2000. That also has got to change.

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 (S.250) that I have introduced with Rep. Jan Schakowsky (D-Ill.) is all about.

This legislation will stop profitable Wall Street banks and corporations from sheltering profits in the Cayman Islands and other tax havens to avoid paying U.S. taxes. It will also stop rewarding companies that ship jobs and factories overseas with tax breaks. The Joint Committee on Taxation has estimated in the past that the provisions in this bill will raise more than $590 billion in revenue over the next decade.

As Congress debates deficit reduction, it is clear that we must raise significant new revenue. At 15.8 percent of GDP, federal revenue is at almost the lowest point in 60 years. Our 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. At a time when the middle class already is disappearing, that is not only a grossly immoral position, it is bad economics.

We have a much 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.

Here’s the simple truth. You can’t be an American company only when you want a massive bailout from the American people. You have also got to be an American company, and pay your fair share of taxes, as we struggle with the deficit and adequate funding for the needs of the American people. If Wall Street and corporate America don’t agree, the next time they need a bailout let them go to the Cayman Islands, let them go to Bermuda, let them go to the Bahamas and let them ask those countries for corporate welfare.


Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.

BofA On the Brink, But Still Not Yours (Yet)

BofA On the Brink, But Still Not Yours (Yet)

Dow Jones posts fake release for two hours; bank gets fake website blacklisted, briefly

Bank of America executives, investors, and opponents alike reacted with surprise to yesterday’s news—posted for two hours on Dow Jones Newswire and elsewhere—that the mammoth financial institution, realizing it was heading for a taxpayer bailout, was asking Americans to start thinking about what they’ll do with BofA once they own it, and to start advertising that vision too.

The news, of course, was a hoax. [The Humor Times posted the BofA “reaction” to the news — itself a hoax, as we had hypothesized — yesterday. It was, as we at HT had speculated, a “Yes Men” inspired hoax, via their “Yes Lab” website, which is “devoted to helping progressive organizations and individuals carry out media-getting creative actions around well-considered goals.” The Yes Men are well-known for very creative actions that bring a lot of publicity to issues in a humorous but educational way. Since that’s basically our mission as well, we are very enamored of these guys! If you haven’t seen their movie, The Yes Men Fix The World you might want to check it out sometime, it’s very entertaining.]

Your BofA spoof
Spoof website

The fake YourBofA.com website was quickly, but temporarily, blacklisted by Google as a potential “phishing scam,” despite the site containing no forms, spyware, or other characteristics of a site engaging in phishing. Firefox and Google Chrome users who tried to load YourBofA.com were warned that the site may be “dangerous,” while some individuals with Gmail accounts reported that emails containing the URL were bounced back or not delivered.

An investigation by Raw Story concluded that “It’s likely that Bank of America reported the site to Google as a phishing scam.” Shortly after the article’s publication—and with the help of thousands of volunteers complaining to Google—the website was taken off the blacklist.

Today’s reports of slumping profits make the fake site all the more timely. “This site is a forum for people to imagine what they could do with this bank,” said Jane O’Heely of the Yes Lab, one of the site’s creators. “The ideas we’ve gotten already show we all know as much as bankers about how a bank ought to be run—and actually, a good deal more.”

“A bank doesn’t have to be something that charges you fees, invests your money in things you abhor, destroys poor communities with predatory lending, and then threatens to take down the global economy if you don’t agree to bail it out,” said Logan Price, who helped create BreakUpBofA.com. “Thinking of alternatives to this nightmare is not rocket science.”

Fake press release

The hoax was perpetrated by means of a fake press release; it was followed two hours later with a fake angry retort [this is the release the Humor Times reported on], so that no journalist would be fooled for very long. “We wanted to get people thinking about how they’d run banking differently, not to really fool anyone,” noted O’Heely. “The whole fake release thing was just a way to publicize it and get people posting ideas and ads.”

“Any response by Bank of America would just help spread the word, and they seem to know that,” added O’Heely. When Bank of America got Google to blacklist the website as “phishing” (which it was not), the Yes Lab mobilized 4,000 volunteers to complain, which quickly worked to de-list the site and give this press release a small extra hook.

The website’s centerpiece is an open call to American taxpayers to begin considering what they will do after a bailout, when they’ll have a chance to become the company’s majority owners. The “bank” also asks the public to advertise their visions with a tool for generating web banners—images that could give Bank of America a very real “google problem” not unlike Chevron’s. The site also includes a letter from CEO Brian Moynihan that admits to the bank’s many failings—short-sighted investment decisions and the massive accumulation of le gal liabilities, causing plummeting share prices and inexorably pushing the company towards a public bailout.

The YourBofA.com website was a collaboration between the Yes Lab, Rainforest Action Network, and New Bottom Line. A number of folks within Occupy Wall Street’s Alternative Banking working group also helped with the site. Like other Yes Lab websites, this one is hosted by May First / People Link.

The website comes at a time of rampant distrust of big banks. Even top Federal Government regulators have recently called for the end of “too big to fail.” As Harvey Rosenblum, the head of the Dallas Fed’s research department, recently wrote: “Many of the biggest banks have sputtered, their balance sheets still clogged with toxic assets accumulated in the boom years… creating a residue of distrust for the government, the banking system, the Fed and capitalism itself.”

“Most Americans, and even some regulators, see what’s wrong with the state of our banking system,” said Price. “We have a real opportunity to safely and proactively push this company towards managed bankruptcy and create smaller, more responsive financial institutions that help American communities rather than harm them.”