When the greed, recklessness and illegal behavior on Wall Street drove this country into the worst recession since the 1930s, the largest financial institutions in the United States took every advantage of being American. In 2008, Congress approved a $700 billion gift to Wall Street. A further $16 trillion was provided by the Fed.
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 of mounting deficits, of their creation, 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 (corporate tax rate of 0%) to dodge U.S. taxes. It worked. Not only did BofA pay nothing in federal income taxes, it received a rebate from the IRS worth $1.9 billion that year. JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. 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.
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. Offshore tax abuse is not limited to Wall Street. 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. During tax season, however, they shift drug patents and profits to the Netherlands and other offshore tax havens to dodge U.S. taxes.
Apple wants all of the advantages of being an American company, but it doesn't want to pay American taxes or wages. It creates the iPad, iPhone, 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 US tax bill would have been $2.4 billion higher in 2011.
Offshore tax schemes are so absurd that one five-story office building in the Cayman Islands is now the "home" to more than 18,000 corporations.
Today, companies are using these same tax schemes to lower their tax bills by shipping American jobs and factories abroad. More than 5 million U.S. manufacturing jobs were lost and more than 56,000 factories were shuttered 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.
SENATOR BERNIE SANDERS