Senator Elizabeth Warren Blasts Corporate Tax-Dodgers: “The Tax Code Is Rigged”

elizabeth-warren-630x4201I don’t normally use words like “BLASTS,” “EVISCERATES,” or “DESTROYS” in headlines because I find them hyperbolic, and often an exaggeration of the actual story. In this case, “Blasts” is a pretty accurate description of Senator Elizabeth Warren’s harsh words for corporations like Walgreens that are moving their headquarters overseas to get out of paying their fair share of taxes. This is a practice known as “corporate inversion” and it is becoming a more common practice with corporations facing ever-increasing demand from shareholders to produce higher and higher dividends.

The practice of maximizing shareholder value is something that has caused numerous American jobs to be shipped overseas in order to slash operating costs. This story from the Washington Post describes how moving operations to places like India has helped maximize dividends and CEO compensation, but at the cost of local economies that depended on companies like IBM.

Here’s Senator Warren’s opinion of corporate inversion:

Tax lawyers call this process a “corporate inversion.” But don’t let that bland name fool you – these companies are renouncing their American citizenship, turning their backs on this country, simply to boost their profits.

If a person did that, we’d call them a freeloader and insist that they pay their fair share. And that’s exactly what our tax laws do for people who renounce their American citizenship. But when corporations do it, they don’t suffer any consequences at all. Forget whether corporations are people – in this corner of the tax code, we’re treating corporations better than people.  (Source)

So what is “corporate inversion”? has the following definition:

Re-incorporating a company overseas in order to reduce the tax burden on income earned abroad. Corporate inversion as a strategy is used by companies that receive a significant portion of their income from foreign sources, since that income is taxed both abroad and in the country of incorporation. Companies undertaking this strategy are likely to select a country that has lower tax rates and less stringent corporate governance requirements. (Source)

Some people would argue that reducing costs through outsourcing operations or manufacturing not only guarantees more money for shareholders, but it also allows products to be sold at lower prices and U.S.-based employees can get paid more. However, there’s little evidence of the benefit to employees. Not only are companies like Wal-Mart not paying their workers a living wage, they’re also depending on the U.S. taxpayers to pick up the tab for covering their healthcare and food stamps – all while exploiting every possible loophole to avoid paying taxes on their profits. Granted, Wal-Mart still has their corporate headquarters in Arkansas, but other companies like Caterpillar have relocated their headquarters to Switzerland in order to pay less in taxes – all while continuing to enjoy all the benefits of our infrastructure and workforce. Jon Stewart explains more about how this works below:

You and I don’t have the money to hire expensive lawyers and accountants to minimize our tax burden, or even find ways to qualify for millions of dollars in subsidies. Yet, many conservatives look down on the working poor who receive government assistance while at the same time making excuses for corporations who take advantage of every loophole that they can find. These companies want to use our roads to transport their goods, our schools to educate their future employees, and our police departments to protect their stores and assets – except they want everyone else to pay for these services provided by the government on our tax dollars.

Senator Elizabeth Warren sums it up:

The companies that are pursuing these corporate inversions know all of this. That’s why they are not actually leaving America behind. They just don’t want to pay for it. Our achievements aren’t magic. They didn’t simply happen on their own or through dumb luck. America works – our government works – our democracy works – because we all pitch in and do our part to build the things that none of us can build alone. The things that give everyone a chance to succeed. We’ve had enough of rich corporations taking whatever they want and expecting everyone else to pick up the pieces. The time for freeloading is over. (Source)

As long as we keep on allowing corporations to shirk their tax obligations while paying their workers as little as possible, this places a continual burden on the ever-shrinking tax base and adds to our ever-growing national debt. As much as many conservatives like to talk about “fiscal responsibility,” they’re being hypocrites by making excuses for these companies while referring to underpaid workers receiving government assistance as “moochers” and “freeloaders.”

If you’re tired of this hypocrisy like I am, please sign on to show your support for the Stop Corporate Inversions Act for which Senator Elizabeth Warren is a co-sponsor – and then remember to make sure you’re registered to vote this November. We can stop corporations from avoiding their tax responsibilities and we can get rid of the politicians that are in their pockets, but it won’t happen unless we vote. It’s as simple as that.


Facebook comments

  • Avatar

    Funny because Wall Street and corporations always keep calling poor people nazis. They know they are repeating the history because during World War II, corporations and banks went to Switzerland to deal with nazi regime in order to maximize the profits. Now America’s government are turning into fascist goldmine, corporations and banks are dealing with them from Switzerland.

    This is going to be paradigm leap into next world war that would dwarf all of wars combined in history of this world. Make sure to fight for the right side.

    • William Fite

      Making a huge and inaccurate leap there, WOW.

  • William Fite

    Ever thought a 40% tax rate might have something to do with this problem. The US pays one of the highest if not highest tax rate in the world. Maybe if we brought the tax rate down we might get some of these companies back.

    If Sen. Warren can’t see that as a problem, maybe she ought to look for another line of work.

    • LLamoure

      A 40% tax rate is not the problem. Companies don’t pay 40%. They get credits and loopholes and subsidies that bring their effective tax rates down under 20%. Who picks up the slack when that happens? You and I and every other American citizen because we don’t have an army of lawyers, accountants, and lobbyists working to reduce our tax liability. I think Sen. Warren sees the problem just fine.

      • William Fite

        ExxonMobil paid an effective tax rate of 39% and $31 billion in taxes
        Chevron paid an effective tax rate of 43% $20 billion in taxes

        That does not look like under 20% like you claim.

      • mckittd

        Maybe they need to hire a better tax advisor or maybe it’s because they have have been raping the people of this world and it is time to get some of it back. These energy companies don’t mind paying the tax because they know they can set the price of gas to whatever they want and their profit margins are frickin absurd anyway.

      • OhOhSayCanYouSee

        Care to share the sources you used for this information? I’m always interested in objectivity.

      • Guest

        That was based on their ‘eddective’ income after all those deductions were made,,,,

      • AlienatedToo

        Exxon and Chevron pay high taxes here in the USA because that is the lesser of two evils – they would actually pay more under other governments. The USA is considered one of the lowest taxations for oil companies. Microsoft, IBM & Apple paid 19%, 24% & 26% respectively.

  • Eg Kbbs

    Dare I suggest a connection between the tax code being rigged for the rich and that the rich have access to those making the tax code ?

    • Paper Boy

      You can also suggest a connection to the lobbyists who work within the system for the benefit of their clients. Back in 2008 then candidate Barack Obama pledged to reign in the lobbyists to deter their influence, but so far, no cigar.

  • Matthew Reece

    There is no such thing as a fair share of robbery and slavery. Also, corporations do not pay taxes; they pass the cost on to their customers so that individuals pay more taxes.

    • ConsensusReality

      If that’s really true, why are they moving overseas to avoid taxes?

      • Matthew Reece

        That is really true, and they are moving because lower taxes allow them to provide cheaper products to their customers, which makes them more competitive in the marketplace. This is also good for consumers, as less money diverted to pay off corporate taxes means more money for anything else the consumers need or want.

  • Joe

    You should do your homework on the Walgreens example. In that situation, Walgreens purchased 45% a Swiss firm, Alliance Boots, that primarily sells products in Europe. The Swiss firm pays corporate taxes throughout Europe on its profits there, but the corporate tax rates in those countries are lower than the US corporate tax rate, which is the highest in the industrialized world. Walgreens has the option to purchase the remaining 55% of that company next year.

    If Walgreens were to exercise that option and purchase the rest of Alliance Boots, the US Treasury, in all its wisdom, claims that Walgreens would now owe US income taxes on Alliance Boots’ European profits — even though the USA collects no taxes from Alliance Boots today, obviously. The increased tax bill to Alliance Boots (and therefore Walgreens) would be $4 billion every year.

    The only way Walgreens can keep the tax payments AS THEY ARE RIGHT NOW, with US profits creating a US tax bill and European profits creating a European tax bill, is to move its HQ to Switzerland. That’s the type of disadvantage the US tax system creates. It gives inherent incentives for US companies to leave. Idiots like Elizabeth Warren, who are part of the problem, exacerbate that problem for both American multinational companies and for the American economy. Walgreens won’t be moving to keep from paying US taxes on US income — they’ll move to keep socialists like Warren from getting their hands on non-US income.

    Want to fix the problem? Quit making it difficult for the US economy to grow and challenging for investments to earn adequate returns in this country. Getting rid of politicians with NO economic training (e.g., Warren) would be a great first step.