Tax season has come and gone. But while some of us may be looking forward to refund checks from the cash-strapped state or federal government, a growing number of American corporations and businesses are avoiding American taxes altogether by moving their corporate headquarters to offshore tax havens such as Bermuda.
But exactly how much money are we talking here? According to an IRS consultant, the United States government is losing out on an estimated $70 billion annually. This $70 billion that is being lost in tax revenue is the size of all the state budget deficits that are making states cut their funding to such programs as education and health care.
A good example of a tax-dodging company is vice president Dick Cheney’s old oil-services company Halliburton. When Cheney became CEO of Halliburton back in 1995, that company had only nine subsidiaries sheltered in offshore tax havens. By 1999, a year before Cheney left to run as Bush’s vice presidential candidate, that number was up to 44. In addition, Cheney himself, although he resigned three years ago, is still receiving annual compensation from the company.
Instead of having it all in one lump sum of $800,000 (which would take out more in taxes), Cheney opted for “deferred compensation,” which amounts to payments of around $180,000 per year from 2001 to 2005. However, to back up Cheney’s assertion that “he has no financial interest in the success of the company,” he says he took out an insurance policy for the value of his deffered compensation, so he’ll receive the money even if the company goes under.
Considering the spectacular falls that such companies as Enron, Comcast and Arthur Anderson took because of shoddy bookkeeping, it sounds to me like Cheney is insuring himself against any backward slide Halliburton may take now that he’s left the company.
However, let us take a further look at the war and the Republican Congress’ lack of fiscal responsibility.
Back in early March, the Army secretly awarded Halliburton a contract to fight Iraqi oil fires which could be worth up to $1 billion. The Army did this without receiving other competing bids. The thing is, this same unit of Halliburton that received the bid, Kellogg, Brown and Root, was awarded the Army’s first private contract to manage troop tent cities back during the first Bush administration, by non other than Dick Cheney, then Secretary of Defense.
What’s interesting is that, during the Clinton years Halliburton lost that contract after KBR was alleged to have been overcharging the government. And in 1995 Cheney became the CEO of Halliburton.
But what does this have to do with Congress? At the moment there is a House resolution called the “Corporate Patriot Enforcement Act” (HR 737/S 384), which is “A bill to amend the IRS code of 1986 to prevent corporate expatriation to avoid US income taxes.” In the House this bill has garnered over 125 bipartisan co-sponsors, and similar legislation was introduced last year in the Senate which was approved this past March.
However, both House leaders Dennis Hastert (R-IL) and Tom Delay (R-TX) have been refusing a vote on this bill in Congress. This bill would crackdown on offshore tax evasion and bring in the $70 billion in lost tax revenue back to America.
Unfortunately, even if this were to take place, that tax money would then be going back into the pocketbooks of the same government that is not handling the financial aspect of the war or the economic downturn of this country very well.
This article is the first in a two-part series exploring the links between Cheney, Halliburton, the reconstruction of Iraq and Congressional legislation concerning corporate tax evasion.
