Tuesday, October 16, 2012

hard working rich

Corporations doubled their profits to $1.9 trillion in less than ten years, but since 2008 they've reduced their tax payments from a twenty-year average of 22% to just 10%. the Tax Justice Network estimated that up to $32 trillion is hidden offshore. In regards to America thats an estimated tax loss of about $260 billion.

But don't the rich people EARN their money through hard work and innovation and deserve it? No. 60 percent of the income for the Forbes 400 came from capital gains. A lot more of it came from other forms of deregulatory subterfuge. CEOs have used carried interest , performance-related pay , stock options , and deferred compensation to make off with extra money.

Studies reveal that relatively few business startups are initiated by the very wealthy. Only 3 percent of the CEOs, upper management, and financial professionals were entrepreneurs in 2005, even though they made up about 60 percent of the richest 0.1% of Americans. Instead, they invest over 90% of their assets in a combination of low-risk investments (bonds and cash), the stock market, and real estate.

 Restaurants like Subway, McDonald’s and Starbucks avoid millions in taxes each year by claiming that their products are intellectual property.  Franchises pay money to companies to sell their product and use their logo. But, as Waldron writes, “instead of collecting the fees in the United States, where the intellectual property filings were created, Burger King, McDonalds, and other chains often house the fees in other low-tax countries in order to save millions of dollars.”

For example, take Burger King’s Whopper, the fee the European units pay to use it goes to Burger King's main European office in Zug, Switzerland. There the effective tax rate could range from 2 percent to 12 percent. Subway and McDonald’s operate thousands of stores overseas, but those companies, too, have become good at avoiding  taxes to the tune of millions. Subway International B.V. reaps around $150 million each year in royalty payments from franchisees in Europe. However, accounts show almost all the income flows to its parent, a partnership registered in the Caribbean island of Curacao which offers tax exemptions on overseas income, according to accountants Deloitte. McDonald's overseas subsidiaries generate over $17 billion a year in revenues.

Starbucks has paid no tax since 2009 despite sales of £1.2bn.Since opening  in the UK in 1998 and opening 735 outlets, it paid just £8.6m in income taxes - a rate of 0.3 per cent overall. In the past three years alone, Starbucks paid no tax whatsoever on sales of £1.2bn. Its nearest UK rival, Costa, tax bill came to £15m, or 31 per cent of profits.

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