US Tax System = Paul Krugman Lays Bare Latest Corporate Scheme to Rob American Taxpayers

If corporations are people, as the Supreme Court says, then why don't they have to pay taxes? Paul Krugman expresses outrage about the latest corporate scheme to dodge taxes in today's New York Times column.

Admittedly, corporations do still pay some taxes. "The federal government still gets a tenth of its revenue from corporate profits taxation," the Nobel-prize winning economist writes. "But it used to get a lot more — a third of revenue came from profits taxes in the early 1950s, a quarter or more well into the 1960s. Part of the  decline since then reflects a fall in the tax rate, but mainly it reflects ever-more-aggressive corporate tax avoidance — avoidance that politicians have done little to prevent." 

The latest of these aggressive tax-avoidance ploys is called “ inversion.” And as Krugman explains, it's a purely legal maneuver that allows companies to claim that its "U.S. operations are owned by its foreign subsidiary, not the other way around, and uses this role reversal to shift reported profits out of American jurisdiction to someplace with a lower tax rate." 

The company does not need to move overseas to do this. What a quaint and old-fashioned notion. It's all done on paper. Sometimes, it might involve opening an office somewhere abroad. The most egregious current example is Walgreen, which will continue to operate its thriving pharmacy business in the U.S. (have no fear, your local Walgreen's will remain) but for purely tax reasons, is reportedly about to declare itself Swiss, which "will deprive the U.S. government of several billion dollars in revenue that you, the taxpayer, will have to make up one way or another," Krugman writes.

 Read more: Paul Krugman Lays Bare Latest Corporate Scheme to Rob American Taxpayers | Alternet