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Negative Taxes and Positive Loopholes

by on July 12, 2011

News of the World no longer exists, but Rupert Murdoch still knows how to make money.

Over the past four years Murdoch’s U.S.-based News Corp. has made money on income taxes. Having earned $10.4 billion in profits, News Corp. would have been expected to pay $3.6 billion at the 35 percent corporate tax rate. Instead, it actually collected $4.8 billion in income tax refunds, all or nearly all from the U.S. government.

That is from Reuters, a generally reliable source when it comes to facts. The article describes how Murdoch profits off the tax system.

One [way] is the aggressive use of intra-company transactions that globally allocate costs to locations that impose taxes — and profits to areas where profits can be earned tax-free.

For that Murdoch can thank laws and treaties that treat multinational corporations much more generously than working stiffs, such as those who make up the audience for his New York Post and for his British tabloids with bare-breasted women. Working stiffs have their taxes taken out of their pay before they get it, while Murdoch gets to profit now and pay taxes by-and-by.

News Corp. has 152 subsidiaries in tax havens, including 62 in the British Virgin Islands and 33 in the Caymans. Among the hundred largest U.S. companies, only Citigroup and Morgan Stanley have more tax haven subsidiaries than News Corp., a 2009 U.S. Government Accountability Office study found.

News Corp. had nearly $7 billion permanently invested offshore in 2009, money on which it does not have to pay taxes unless it brings the money back to the United States. Meanwhile, it can use that money as collateral for loans in the United States, where interest paid is a tax-deductible expense.

Smart people who have morals dream of doing what Murdoch actually does, which is make money off himself. You also might have heard recently that the US is approaching default on its debt, which is not usually a big deal and the magical debt ceiling is raised again.  This time, people who think like Murdoch does have a plan; it’s the same plan that caused zero job growth over the last decade. Rational people who were not in a daze over the last decade point out that

this notion that eliminating tax loopholes and peeling back the overly generous tax breaks for wealthiest 2% will hurt job creation is nothing but a fantasy. There has never been a shred of evidence that links the kind of tax revenue increases being proposed to the creation, or lack thereof, of jobs. In fact, the result of the Bush tax breaks was some of the lowest job creation in our nation’s history, along with an explosion of our national debt that we are still trying to climb out from under. Yet John Boehner, Mitch McConnell, Eric Cantor and the rest of the GOP brain trust that so happily endorsed the Bush policies that created much of this mess, are now trying to suggest that these same policies are our only way to salvation and jobs? Really, you can’t make this stuff up!

Job growth 2000s

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From → Economy, US Politics

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