Corporate Taxes: Last Week Tonight with John Oliver (HBO)

taxes essentially the government's GoFundMe page now today is April 15th which means you have just 45 minutes to file your taxes except relax don't panic because thanks to the weekend and a holiday the deadline is actually April 17th this year except don't relax do panic that's still not enough time to do it right you're you're absolutely and you're going to jail Anthony many people are perplexed and mystified by our tax system perhaps best exemplified by this Instagram video from cardi B you know that government is taking 40 percent of my taxes and Uncle Sam I want to know what you're doing with my tax money but why does y'all doing with my money what is your with my money I want to know I want receipts I wants everything I wanna go to my cousin weenie [Applause] whoa whoa cardi if you really want to know where your money's going may I present to you the recently passed omnibus spending package [Applause] because it turns out cardi your money goes to your military your health care and your Social Security and veteran and unemployment benefits everything else is just on discretionary and of course interest now as you may recall late last year Republicans passed and Donald Trump signed a tax reform bill and in selling it Trump made some clear promises about who stood to benefit our focus is on helping the folks who work in the mail rooms and the machine shops of America the plumbers the carpenters the cops the teachers the truck drivers the pipe fitters the people that like me best well that that is clearly nonsense because if this bill were really helping the people that like Donald Trump best it would exclusively benefit Eric Trump Roseanne Barr and anyone who's ever looked both ways before whispering it was the choose and the truth is for all chumps talk of pipe fitters the biggest tax rate cuts by far actually goes to businesses with the top federal corporate tax rate the tax on a company's profits going from thirty five percent to just twenty one percent and to be fair many policymakers on both sides had argued at the 35 percent federal rate among the highest in the world should actually come down but to be even fairer most companies didn't pay thirty five percent in fact before the bill was signed to the effective rate the amount companies actually paid was closer to twenty four percent and some large companies have historically paid far less than that you may remember a few years ago people were furious about this ge had profits of fourteen point two billion dollars in 2010 five billion dollars of that made in the United States but the company's expected US tax bill a grand total of zero dollars okay so when the total is zero you can't call it a grand total there is literally no total less grand except maybe total cereal and that's just because it tastes like your spoon somehow missed the cereal and now you're just eating the box that it came in and GE may well say we'll hold on that's just one year but a recent study found that between 2008 and 2015 18 large profitable companies including General Electric paid no federal income tax at all over the entire period not at all and that is a staggering total which is incidentally what they used to call total with raisins until they got more honest who changed it to total with raises but who gives a so tonight in honor of upcoming tax day we thought we'd give you just a glimpse of the lengths that companies will go to to legally avoid taxes both here and abroad now corporate tax avoidance has a long and infuriatingly proud history in the 1980s for instance a lawyer named John Carroll jr. came up with a tactic to move US companies offshore to avoid taxes and his firm celebrated him with and this is true a 13-minute operator staged in his New York apartment and I'll give you just a very small taste [Music] Wow we may have just found the only musical resistant to race blind casting you can't go Hamilton on this one because those people really have to be white now now that the tax dodge being celebrated they're involved taking an American company and headquarter in it in Panama where taxes were lower something its creator called the Panama scoot which sounds like the name of a tiny elf in a cowboy hat my name's Panama scoot and I sleep in your boots and offshore scooting is actually something of a common theme in corporate tax avoidance for decades companies have hunted for ways to get their money to friendlier tax havens like the Cayman Islands you may remember that during the 2012 election it emerged that Mitt Romney had money in the in companies in the Caymans which led to this magnificent clip of John Stossel saying the one thing he probably shouldn't be saying to the person he's speaking to but Romney pays taxes and all the money earned from the cayman entities i would think it would be like pirate heaven some pirates can't say the word pirates to a guy with an eyepatch it can't it's not fair it's like me sitting down across from you and calling you bootleg Geraldo yes yes it's obvious but it's also lazy and hurtful that's an indoor thought and tax havens have become magnets to corporations who try and shift as much of their profits there as possible it's a major reason why in 2016 nearly two-thirds of the profits made by American multinationals outside the US were booked in just six low or zero tax countries and it's a lot easier to move profits offshore than you might think an increasingly popular way particularly pharmaceutical and high-tech companies like Google avoid paying the 35% is to shift their patents computer code pill formulas even logos from their US bases to their outposts in low tax countries today a company can move automatically all of its assets just on paper you can push a button and move your algorithms you know could take the recipe out of the vault yeah put it in a Swiss Fault and then and then it's Swiss yep coke could put that recipe in a Swiss vault and their profits would move offshore that is very roughly how it works although for the record just being in a Swiss vault doesn't automatically make something Swiss that's why we don't call this Swiss gold we call it Nazi gold those are Hitler bucks your Swiss and this this happens all the time and the best innovators in weasely accounting have arguably been tech companies look at Apple for years they've been deferring paying US taxes on foreign profits by stashing the money overseas and not bringing it back so much so that at the end of last year they had 269 billion dollars parked overseas and when their CEO Tim Cook appeared in front of Congress a few years back he was very defensive about that we pay all the taxes we owe every single dollar we don't move intellectual property offshore and use it to sell our products back to the United States to avoid taxes we don't stash money on some Caribbean island now he was technically correct there because Apple didn't stash their money on a Caribbean island they did however have it stashed on this island Ireland which is it is true not in the Caribbean so one word made a lot of difference there it's like if somebody said the one thing I can promise you is that this refrigerator is absolutely not full of severed Caribbean heads maybe that is technically true but I'm still going to pass on a sparkling water and when Ireland indicated that it planned to change its tax laws Apple found a new shelter for profits on this island the Isle of Jersey a tax haven in the English Channel which is again not technically in the Caribbean although when you really look at it you could almost mistake it for the Caribbean if you squint a little drink 9 points of beer and hold a picture of the Caribbean in front of us meanwhile Google used a slightly different tax workaround sending its money on something of a world tour Google license some of the intellectual property it created here in the US to a subsidiary in Ireland but it turns out Google's overseas profits don't even get taxed there because Google then reportedly funnels those profits through the Netherlands and then to of all places Bermuda where the corporate tax rate is zero now that tax trick actually has a name it's called the double Irish with a dutch sandwich it sounds like a disgusting sex act or an even more disgusting Waffle House menu item it's it's when someone opens up a baked potato farce in it and closes it again really quick that's one of it that that's that is exactly what it is and when Google CFO was asked about their tax policies at a conference his answer nearly got him laughed off the stage we pay our taxes in every jurisdiction to the full extent that the law allows us and that's what we do we pay every penny of tax we owe to everybody everywhere ok the reaction to the sentence I pay all my taxes should never be incredulous laughter unless you are a very wealthy dog who's just spoken for the first time and here is where I have some good news and some bad news the good news is that Trump's tax bill actually forces companies to pay taxes on all the money they've stashed overseas the hope is that they'll then bring it home in something called repatriation the bad news is the tax they're being forced to pay which may have once been 35% remember has been slashed to as little as eight to 15% which seems less like a punishment and a lot more like actively rewarding companies for tax avoidance but Steve minuchin Treasury secretary an objectively good-looking man argues that this would be a huge benefit to America's workers we will have a one-time tax on overseas profits which will bring back trillions of dollars that are offshore to be invested here in the United States to purchase capital and to create jobs now I know it was hard to pay attention to what he was saying because you were just automatically undressing to go with your eyes and you do it whenever he opens his mouth I'm all right I'm definitely right the guy's a California ten he's a smoke show but but what he's saying there is giving these companies a break on the taxes they owe is worth it because it will lead to job creation and that is hard to completely disprove because anything theoretically could lead to jobs you can say I'm dipping this badger in fudge to create jobs and I can't prove that you won't create any jobs by doing that but I would argue that if creating jobs is your main goal there are probably better ways to do it now luckily we actually have the benefit of a test case here because in 2004 we basically did the exact same thing under the American Jobs Creation Act it offered a one-year tax holiday where companies could bring back overseas profits and just a five percent tax rates the idea was that they would then create jobs but when the Senate looked at the employment numbers of the 15 companies that brought back the most money this is what they found these are the average numbers of US jobs at those companies over a five year span here is where the big supposedly job-creating tax holiday kicked in and that is pretty underwhelming I would argue that's the most useless ineffective holiday since Arbor Day and I'm sorry Arbor Day but your secretaries day for trees and we all need to accept that in fact instead of hiring workers across the board companies mostly rewarded their shareholders using 94 cents out of every dollar they brought home on stock buybacks and dividends something you can read about in the best-selling book yeah no they did that by acclaimed author everyone who knows anything about corporations and look for many of those companies that may have been the best use of their money there is no point in hiring people that you don't need but the Trump administration is fiercely insisting that this time their tax holiday is already creating jobs and some companies have seemed happy to pay along play-along Apple put out a press release not long after the tax bill was signed titled Apple accelerates US investment and job creation bragging they were about to create over 20,000 new jobs and Trump was quick to take credit President Trump tweeting in response quote I promised that my policies would allow companies like Apple to bring mass of amounts of money back to the United States great to see Apple follow through as a result of tax cuts all caps okay first that is a solid read from Jake Tapper there in fact I think all anchors should be forced to shout whenever Trump uses all caps in tweets I'll show you this morning the president announced that he was quote heading to see the border wall prototypes in California or today today the president wished all Americans are happy Easter but but for all the Trump's excitement those 20,000 Apple jobs were probably going to happen anyway given that the hole was entirely consistent with what Apple was doing in the United States before the tax cut bill passed and Tim Cook knows this this is how he responded when asked just how much of his hiring spree was down to Trump's new tax plan there are large parts of this that a result of the tax reform and there's large parts of this that we would have done in in any situation and so I haven't spent a lot of time in categorizing those two because to me this is about America it's not about which bucket you put things in yeah but actually it does matter which bucket you put things in because I would rather put things in a bucket labeled smart economic policy than one labeled put money in here I like money thanks dummies Tim Cook and look look there are legitimate debates over how and how much we should tax corporate profits but we just had a huge chance to reform our tax code and we absolutely blew it because effective tax reform is not just about lowering rates it's about closing loopholes for instance one reasonable idea raised last year was forcing companies to pay a minimum tax in every single country they operate in it's a bit complicated but that may well have reduced their abuse of tax havens but that proposal never even got out of committee so the result here is that our tax code is still full of loopholes and however much Trump talked about how tax reform would benefit cops and pipefitters it's worth knowing that once he got behind closed doors his message seemed to change we're told the president is still celebrating passage of the Republican tax cut bill sources with firsthand which tells CBS News that he told a group of wealthy people at his exclusive mar-a-lago estate quote you all just got a lot richer that's right so on Tuesday as you scrape together your taxes and like cardi B wonder what Uncle Sam is doing with your money rest assured that Donald Trump's tax reform continues to let companies engage in sophisticated tax avoidance schemes and to those companies I say this on behalf of America please enjoy this double Irish with a Dutch sandwich I made it bu myself eat it while it's hot [Applause] you

Channel: LastWeekTonight

Views: 8,454,627

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Id: RKjk0ECXjiQ

Length: 16min 3sec (963 seconds)

Published: Mon Apr 16 2018