Bush Scandals List

373. Bush tax policy favors foreign corporations

A GAO study released on August 12, 2008 found in a statistical sampling 71.7% of foreign corporations with subsidiaries or units operating in the US did not pay any tax in at least one year during the period 1998 to 2005 as compared to 54.9% of US corporations. At the same time, 45.1% of US companies paid taxes in every year of the 8 year period while only 28.3% of foreign ones did –this despite the fact that foreign corporate units tended to be larger with average gross receipts of $43 million as compared to $5 million for their American counterparts. This was also true among the subclass of large corporations where foreign companies averaged gross receipts of $663 million to $447 million for US corporations. The expectation would be that corporations of similar size, age, and type would have similar tax burdens. But even if there are differences in these parameters (foreign corporations tend to be newer and concentrated more in manufacturing and wholesaling), the data are strongly suggestive that transfer pricing is going on. This is a practice whereby a foreign parent company charges inflated prices to its US subsidiary reducing the subsidiary’s profit (and US tax liability) and effectively transferring that money abroad (where lower tax rates may be in force). Ironically, Bush corporate tax policies favor foreign companies over domestic ones, and both to the detriment of ordinary taxpaying Americans.

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