Congress Says “Do As We Say, Not As We Legislate”
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How dare taxpayers follow the law!
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Politics is perhaps the only place where utterly absurd statements can be made and somehow taken seriously.
The latest such example resulted from a series of reports, issued by the Senate Permanent Subcommittee on Investigations, that addressed corporate tax practices. The reports indicated that corporate behemoths like Microsoft and Hewlett-Packard used accounting strategies to minimize their U.S. tax bills by shifting profits in and out of the U.S.
“Major U.S. corporations are increasingly earning their profits here but shipping them overseas to avoid paying the taxes they owe,” lamented Senator Carl Levin.
Above: Senator Carl Levin is aghast that taxpayers adhere to the tax code he has helped write
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Presumably, Sen. Levin does not mean that the corporations legally owe and are liable for taxes on such profits under the laws of the U.S. What he likely means is that, as a politician and not legislator, he sees a honey-pot that he wishes he could tap into but the Internal Revenue Code, as written by him and his colleagues, does not allow he and the rest of the spendthrift congress to get their paws on it.
Mr. Levin is likely using the “fairness” trope, as in “if the corporations were fair, they would just keep the profits in the U.S. and pay the taxes on it.”
Putting aside that one person’s “fairness” is another’s misguided Robin Hood redistribution, businesses as well as individuals have every right, as Justice Learned Hand so eloquently stated 80 years ago, to exercise tax avoidance: “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.” Good luck to the Chairman of a corporation who decides that his duty is not to increase shareholder wealth but fatten the coffers of government by remitting more corporate taxes than legally required.
And when last checked, there was nothing in the Constitution or any law ever written, including those sponsored by Mssr. Levin, that stipulates that more than the legally required amount of taxes should be remitted to the government if people of the good senator’s ilk don’t think the law doesn’t prescribe enough of a tithe to Uncle Sam. Thus, Mr. Levin’s call for corporations to pay more taxes than they should under existing law is effectively chastising them for following the law.
Which gets us to what Mr. Levin really meant. It is no surprise that HP and Microsoft are not a major presence in his home state of Michigan. Thus, he is in full-throated disgust with the perfectly legal tactics they use and he’s ready to storm the tax code Bastille.
Have at it, Senator! Conservatives and economists of all stripes have long said that the social engineering that is baked into the tax code (via credits, exemptions and other goodies), is inefficient and distorts the flow of capital and makes us poorer as a society. But don’t be surprised if your tax reform prosthelytizing falls on deaf ears within your chamber. The dirty little not-so secret is that the carve-outs and other giveaways in the code are a result of lobbying and pet ideologies by none other than your fellow congress-mates, from both sides of the aisle.
With a little luck, the senator will also carry his crusade on to other government subsidies, like those of the auto industry, at which point he will have not only preached but practiced the virtue of consistency (a rarity for any politician).
-I.M. Windee
