Doing nothing isn’t an option anymore. Washington’s gridlock might make you think otherwise, but the price for political grandstanding these days is measured in grief and misery.
Millions of people and businesses are waiting for the government to do the right thing as passionately as others are waiting on their vaccine shot.
Call me a compassionate conservative on this point or a guy who wants to have it both ways, fiscal responsibility and free spending, but I’m concerned about how we’re going to pay this back, if the economy sputters and rattles rather than roars in 2021.
Debt matters, because eventually it has to be paid back by somebody somehow who must pay more or get less. It’s the law of economic gravity. What rarely happens is a wise, equitable balance of taxing and spending. Taxes, though, are too polarizing, too emotional. Spending is always in fashion. It’s an ideological tug of war that nobody wins.
It seems like the good old days when fiscal conservatives were losing their minds over the $19.5 trillion in debt the Obama administration rang up stimulating the economy after the Great Recession and launching Obamacare. Now we’re cruising past $27 trillion in October with the top down and the wind in our hair.
Small businesses pay taxes. I pay taxes. You probably pay taxes, unless you’re a company that does business in Colorado but prefers not to pony up.
The money has to come from somewhere, so I’m surprised there’s not a push yet to go there, to collect what is already owed. It’s evident by the gridlock that Congress is leaving states to fend for themselves. There’s a relatively small pile of money nobody’s talking about anymore: international tax dodgers.
In 2015 and 2016, then-state Rep. Mike Foote of Lafayette tried to pass legislation to collect state income taxes on profits earned in Colorado squirreled away to offshore bank accounts in low-tax or no-tax locales.
He and then-Rep. Brittany Pettersen of Lakewood introduced House Bill 1275 to put the question on the ballot four years ago. If it became law, it would tax Colorado profits of corporations that pass 80% or more of their loot through offshore bank accounts in, say, Bermuda or Nauru.
“These are tax loopholes,” Foote told me a couple of weeks ago, when I caught up with him about life after politics. “They should be paying their taxes to begin with.”
As he returns to his private law practice, Foote didn’t know of any Colorado Democrats working on the issue. Neither do I.
Yet they have to find money somewhere, and the list is increasingly shortening to you. Legislative analysts back then thought Foote’s bill could have ginned up more than $70 million a year for elementary and secondary public schools.
“There’s a lot of money in these offshore tax havens,” Foote told me. “That’s not in question. The question is can you get something passed.”
That money has problems beyond politics, though.
Competitiveness is the biggest hill to climb. Colorado is always in a dogfight to attract these kinds of corporate employers to pay local salaries and local taxes (and support local candidates), who might also have a financial pipeline to Liechtenstein to lower their tax bill.
So far, only Maine, Montana and Oregon have passed laws on international tax havens, and Oregon repealed its effort in 2018.
“Montana’s not risking much in demonizing multinational corporations,” Patrick Boyle, the lobbyist for the Colorado Competitive Council, told a legislative committee I covered in 2016. “We are. We have an international airport. We have a central location and the opportunity to be a center for economic development. Montana does not.
“Our concern is we’re throwing away dollars to chase after dimes.”
Colorado is weak for the fight, it would appear, and it’s one Washington is equally reluctant to take on, as long as they can dig deeper into debt or deeper into your back pocket. I’m losing faith.
The Trump-led tax reform Republicans passed in 2017 was supposed to incentivize U.S. companies to bring home their profits. The corporate tax rate dropped from 35% to 21%, while some income could remain overseas and pay as little as 10%.
Nonetheless, the Wall Street Journal found only modest efforts to repatriate the estimated $2.7 trillion in American profits parked offshore. Further, the Center for Public Integrity found the number of corporations paying zero in federal income tax doubled from 30 to 60, brand names you’re probably supporting: Amazon, Chevron, Netflix and Eli Lilly, among them.
Meanwhile, I pay about 28%, and the only exotic places where I stash income are on the islands of checking, savings, retirement and, oh yeah, taxes. How about you?
If our lawmakers are not willing to ask multinational corporations to pay more, the rest of us will continue to cover the tax breaks of the rich and connected.
Former Sen. Matt Jones of Louisville, who co-sponsored the tax haven bill, sounded miffed talking about these locations that thrive on sheltering taxes taking offense to being put on a state blacklist.
He, too, sees it as a question of business competition.
“The people getting blacklisted right now are small businesses,” he said, “because they don’t get the advantage of not paying their taxes.”