USA: Congress Rewards Corporate Tax Evaders With US Taxpayers' Money

As the war on terror shows troubling signs of becoming a war of error, the Bush administration is waging a far more successful war on behalf of its corporate backers. The latest victory comes courtesy of Congress' 11th hour reversal of a provision in the Homeland Security Bill banning government contracts for companies that move offshore to avoid paying U.S. taxes.

This vote, shamelessly draped in the American flag, is so hypocritical, so despicable, and such an unmitigated "screw you" to every American taxpayer that it has sent me scrambling in search of a barricade to storm.

The sleazy backroom maneuvering that yielded this year-end dividend for expat corporations offers a perfect -- and perfectly nauseating -- case study in how Washington works. The same leaders who never miss a chance to be seen tearfully singing "God Bless America" with their hands over their disloyal hearts have allowed profits to trump patriotism, even in a time of war.

Earlier this year, with the stink of Enron, Global Crossing, and WorldCom filling the air, the House and Senate, after sensing -- and exhaustively polling -- the public mood, voted overwhelmingly to keep corporate expatriates from milking and bilking the government at the same time. It was a political no-brainer. A red, white and blue slam-dunk. After all, the sooner the issue was stamped "taken care of," the sooner those bothersome questions about Dick Cheney's serial use of offshore shelters while running Halliburton would fade away.

And with the dogs of war in full cry, no politicians in their right mind dared come out in favor of allowing tax dodgers to stick their hands in Uncle Sam's pockets. Out on the campaign trail, even the most corporate-friendly campaigners made it clear that they stood foursquare against such unpatriotic behavior.

"We ought to look at people who are trying to avoid U.S. taxes as a problem," roared President Bush. "I think American companies ought to pay taxes and be good citizens." Trent Lott was equally exercised. "It agitates me that companies will be doing that," he fumed. Cue "God Bless America."

Then Election Day came and went, and lots and lots of big corporate checks were cashed. It was payback time. And a bipartisan who's who of power lobbyists -- including former Senate Majority Leader Bob Dole, former House Ways and Means chairman Bill Archer, former House Appropriations chair Bob Livingston, and former Senate Intelligence chairman Dennis DeConcini -- made sure that the expat companies' government gravy train was kept running, "Mussolini-style," right on schedule.

With the public's attention diverted elsewhere -- namely Iraq, and J-Lo and Ben's engagement -- the tax haven crowd found a much more receptive audience in Washington. Operating behind closed doors, and with next to no public debate, the lame duck Congress made an abrupt U-Turn and sliced-and-diced the no-contracts-for-tax-cheats rule. And without blinking an eye, the president happily signed the bill into law.

That barely muffled cheer you might have heard came from the Caribbean-based corporate offices of companies such as scandal-ridden Tyco, Arthur Andersen progeny Accenture, and Ingersoll-Rand, a corporate chicken that, in a show of national mourning and solidarity, flew the coop a mere three months after the Sept. 11th attacks. All have avoided paying tens of millions in taxes by reincorporating offshore while pocketing tens of millions in federal contracts. And now, thanks to their good friends in Congress, they'll continue to do so. Not only do they not have to help pay for homeland security, but they're helping themselves to the spoils of the Homeland Security Act.

Time and again since 9/11, the president has stressed that patriotism entails more than waving the flag or reciting the Pledge of Allegiance. "Patriotism," he said this summer, "is proven in our concern for others -- a willingness to sacrifice for people we may never have met." I guess the tax exiles and their heavy-hitting lobbyists didn't get the "sacrifice" memo.

The IRS estimates that corporate emigres are depriving the U.S. Treasury of around $70 billion a year. Twenty years ago, one out of every six federal tax dollars was generated by a corporation. That has now fallen to about one out of every ten. Meanwhile, the rest of us are being asked to shovel our dollars into the crater left by Bush's tax policies. Maybe that is what the president had in mind when he talked about sacrificing "for people we may never have met": digging a little deeper so corporate execs basking in the sun-dappled glow of tax-free profits won't have to.

It's bad enough that companies that enjoy all the benefits and protections of operating under the American system are allowed to avoid paying their fair share, especially when we are told, again and again, that we are at war. But allowing those same companies to suckle at the taxpayer teat -- in the name of keeping our homeland more secure, no less! -- is nothing less than scandalous.

Our leaders should be ashamed, and make overturning this dreadful decision the first order of business when the 108th Congress convenes in January. But I won't be shocked if they don't.

• 106 Money & Politics