Our Taxing Problems

Tim Cook from Apple testified to Congress yesterday. To summarize, Apple moves money around the world to reduce/eliminate taxes as the law proscribes.

Our tax laws make this possible! This is a face palm moment, right?

Before we let Apple off the hook, let’s remember tax policy is greatly influenced by lobbying which is paid for by people/corporations whose ox is about to be gored.

During the last election Mitt Romney said he paid all the tax he owed and not a penny more. Left out was these were tax rules Bain Capital had rallied for.

What I’m getting at is, when someone says they’re just following the law, take that with a grain of salt.

Meanwhile, what’s going on here with Apple has been going on in England with Google.

From BBC.com: Google’s boss has told UK politicians to “sort out” the tax system, after criticisms of the internet search giant by Labour leader Ed Miliband.

Mr Miliband told a meeting of the firm’s staff that he was “disappointed” it had paid just £6m in corporation tax on UK sales worth £3.2bn in 2011.

But executive chairman Eric Schmidt said Google followed “the tax laws of the countries we operate in”.

I’m sure they have, but I close my eyes and see accountants playing Twister on the books!

There was a time when big business and the American dream were closely aligned. We could afford to give corporations a little slack, because in the end we knew they’d employ people and drive prosperity. Those days are over. We shouldn’t favor corporations with gifts for acts they no longer perform.

We can’t afford big corporations being financial takers. We just can’t.

Huffington Post: Citizens for Tax Justice, which advocates steeper corporate taxes, said it surveyed major U.S. companies and found that 26 on average paid no net federal income taxes between 2008 and 2011, among them General Electric and Duke Energy .

“This isn’t fair to the rest of us,” said Bob McIntyre, director of the left-leaning tax research group.

No joke. It isn’t.

This doesn’t just go on with money moving to Ireland or the Cayman Islands. There is a state-to-state competition as well.

Take a look at your phone bill (if AT&T is your home or cell carrier). Look down near the bottom for a copyright notice.

Since 2008 all of the current and past AT&T trademarks and previous regional Bell names are now owned by various Nevada Limited Partnerships based at 645 East Plumb Lane Reno, Nevada. This office location is currently an AT&T main office-formerly occupied by SBC/Nevada Bell.

That means when your Connecticut phone bill comes, a rights fee is paid to AT&T Intellectual Property for displaying logos, etc. That lowers AT&T’s taxes here by shifting the income to Nevada where there’s no corporate income tax! Any time you see an AT&T logo, money is being moved to Nevada.

The problem with fixing the tax code is those who want the code fixed (you and me) will be outspent and outmaneuvered by those who want to avoid paying taxes. I wish I had the solution.

Back in the Eisenhower administration, Charles Wilson was nominated for Secretary of Defense. He had been president of General Motors so there was concern he’d make any decision that affected GM in the company’s favor. He said he would not…

“because for years I thought what was good for our country was good for General Motors, and vice versa”. – Wikipedia

Those days are gone.

Is Carnival Cruising For A Bruising?


I was upset, though not surprised, to read Curt Anderson‘s AP article about Carnival Cruise Lines refusal to reimburse the US government after a series of high seas breakdowns. In the billion dollar world of supersized cruise ships we’re talking spare change, $780,000 for the Carnival Triumph and $3.4 million for the Carnival Splendor.

Carnival’s refusal follows a sharply pointed letter from West Virginia Senator Jay Rockefeller to Carnival CEO Micky Arison.

Arison is an interesting character in his own right. It is well reported he renounced his US citizenship to avoid paying billions in taxes. His cruise lines follow a similar strategy.

Other than about half a million dollars in annual property tax on its West Miami-Dade headquarters, and lease payments for its Port of Miami terminal, Carnival gives little to the county or state. Nor does it (or any other foreign-flagged cruise line) pay corporate income tax. On more than one billion dollars in profits last year, all of Carnival’s fees (plus federal taxes on its Alaska-based tour subsidiary) totaled less than one percent of its profits. Had the 35 percent U.S. corporate tax rate applied, more than $358 million would have gone to the IRS. – Miami New Times

Carnival Corporation maintains headquarters in Miami and London. It’s incorporated in Panama.

Carnival’s ships often sail from US ports. None are registered here.

I have written about this subject before. It irks me to see corporations and people take advantage of America this way. Make no mistake, we’re getting jobbed!

When businesses like cruise lines use services, but avoid taxes, we all make up the difference. I have taken cruises in the past, including Carnival cruises. You have subsidized my trips.

It is illegal to structure financial transactions solely to avoid taxes. Do we enforce that at all? Isn’t it about time?

I suspect Senator Rockefeller would like to go after the cruise lines. Me too.

If You Ask Me To Call… The Reply

In my last blog entry I wrote about the Connecticut Department of Revenue Service. They sent me a letter about taxes, but weren’t prepared to handle the onslaught. I blogged about it, then sent a link to my blog to their Twitter account.

A few minutes ago I got an email from Kevin Sullivan, DRS Commissioner. For those who think government is totally uncaring this email will change your mind. Here are some excerpts.

Geoff: First, my apologies for your wholly unsatisfactory experience trying to connect with DRS. We actually do a pretty good job of handling thousands of taxpayer contacts but sure blew it with this one and several more this week. If you will excuse the metaphor, we had a perfect storm of some 60,000 taxpayer notifications – including 2210 notices like the one you received – go out all at once with no one adequately controlling the flow or preparing to handle the response. That, on top of all the usual post-filing calls about refund status, overwhelmed Taxpayer Services.

I finished a not too pleasant “discussion” with my top managers to get this sorted out and get our call times back under control – let alone the call drops that you experienced. You are right that we can and must do better.

Did my celebrity help in getting this response? Maybe, but I take him at his word that the straw that broke the camel’s back came before he heard from me.

I told Commissioner Sullivan I would continue to call and try to reach someone. My 2011 situation is complex and probably not what was anticipated when the rules were drawn up.

In other words, oy!

If You Ask Me To Call…

My 2011 income tax was unusual. I worked for two employers (maybe you heard) receiving a lump sum from one.

Somehow this got me into the penalty box! Too little was withheld. I had to pay extra for the error.

This weekend I got a letter from the Connecticut Department of Revenue Services. It says they want more cash!

It’s a three page note (page four says “This page intentionally left blank” in bold type) which concludes,

If you believe the amount of interest calculated for underpayment of estimated income tax is the direct result of a withholding error in connection to the retroactive income tax rate increase, please contact DRS.

Hello! I am the poster child for underpayment of estimated income tax the direct result of a withholding error in connection to the retroactive income tax rate increase.

I called DRS. They have no email address.

I got a typical ‘high call volume’ recording followed by,

“Your call is important to us. Call back later.”


They hung up!

Seriously, is that the best they can do? How about taking a number and calling me back when you get some time? Is there really someone there who feels having me randomly call hoping a DRS can talk is a good solution?

No one likes to pay taxes. Can’t you folks at least make it a little more pleasant?

The DRS seal says, “Service excellence is our goal.”

Yachts And Taxes

There was one line that stood out and which irks me–though there might be an explanation I haven’t thought of.

There’s an article in the Stamford Advocate about the wealth of our gubernatorial and senatorial candidates. I can’t fault anyone for being rich. Don’t we all aspire to wealth? There was one line that stood out and which irks me–though there might be an explanation I haven’t thought of.

They’d be swamped in the wake from “Odalisque,” Republican Tom Foley’s 100-foot ship flagged under the Republic of Marshall Islands and hailing from the port of Bikini.

It doesn’t seem right when someone registers a yacht or plane in a tax haven. I have written about this in the past.

Why does this loophole continue to exist?