A new audit of what is known as “permanently reinvested foreign earnings”, i.e., profits American corporations keep away from the USA, by investing it in operations, and jobs, in foreign countries, shows that this tax strategy of keeping trillions of dollars untaxed, is one way in which major American companies not only survived the Great Recession, but came through it making record amounts of money.
The problem is, the amount they made and kept from being taxed by the US government is so large—$2.119 trillion* in 2013 alone for the top 1000 corporations—that now Congress and even the Department of Homeland Security are investigating the corporations to see if the tax avoidance strategies are having a negative impact on the economic health, and the national security, of the United States.
*—This amount is double what it was in 2008.
Certainly, rich Americans are likely happy about the untaxed trillions American corporations are keeping out of the USA. Rich taxpayers employ similar strategies to keep from paying income taxes on vast amounts of money themselves. Additionally, most rich people are heavily invested in stocks of major corporations, which generally do better as the corporations increase profitability.
For example, the stock price of General Electric has more than tripled since 2009. Investors with large holdings in these corporations stand to make huge amounts of money, just because of the increased profitability of the companies, obtained by their keeping trillions of dollars away from contributing to the revenue of the United States Government.
This of course increases the burden of revenue payments on all other Americans, and on American companies which do not have foreign investments.
The current national debt of the USA is $17.5 trillion.
The current number of unemployed Americans is 10.5 million persons, including 3.7 million who have been jobless for more then 6 months. However, millions more Americans are employed in jobs paying wages that cannot support them and their families, and millions more than that have become so hopeless during the Great Recession, and its alleged recovery, they have permanently left the work force.
The political impact of the considerable and growing inequality in the United States has yet to be seen, except in a few cases—for example, the election of Bill De Blasio as mayor of New York City.
However, the growing mounds of data showing the extremist tactics of American corporations and wealthy tax avoiders, can only help to cement the view for the vast majority of non-rich Americans that the system is fundamentally fixed against their interests.
Electing the same politicians who have enabled the situation hardly seems like a reasonable course for the electorate to follow.