3c hapter - Index of

The Local Imperative 57
In the meantime, millions of American jobs have been shipped
overseas. The foreign subsidiaries and affi liates of U.S. multinational
fi rms added 729,000 employees between 2006 and 2008, for a total
of 11.9 million, according to Commerce Department data. Over the
same two- year period, they cut 500,000 jobs at home, reducing their
domestic workforce to 21.1 million. 24 (That’s one reason why U.S.
manufacturing employment can decrease even as exports rise.)
In addition to lost jobs, we get lost revenue. The offi cial U.S.
corporate tax rate is 35 percent, but few big companies actually pay
that. According to a 2008 report by the Government Accountability
Offi ce (GAO), a quarter of the country’s largest companies paid
no federal income taxes in 2005 on their $1.1 trillion in gross
sales that year. 25 None. General Electric raked in more than $14
billion in worldwide profi ts in 2010. Not only did it not pay any
U.S. taxes—it claimed a tax benefi t of $3.2 billion. All told, corporations
accounted for just 6 percent of U.S. tax receipts in 2009,
down from 30 percent in the mid-1950s. 26 With the United States
facing a projected $1.4 trillion budget gap, the tax burden falls on
smaller companies and ordinary citizens.
Domestic companies with global subsidiaries cost U.S. taxpayers
an estimated $37 billion a year in lost tax revenue, according
to Business and Investors Against Tax Haven Abuse, a coalition of
small business and investor groups. Add in wealthy individuals, and
the loss from overseas tax havens could be as much as $123 billion,
according to the Treasury Department. At the higher range, the
group points out, those funds could pay for a 12 percent tax cut
for every individual.
In 2007, Citigroup had 427 tax haven subsidiaries, Morgan
Stanley had 273, Bank of America had 115, Lehman Brothers had
57, JP Morgan Chase had 50, Goldman Sachs had 29, and AIG
had 18, according to the GAO. In 2008, Goldman Sachs paid just
$14 million in federal taxes on profi ts of more than $2 billion—
an effective tax rate of less than 1 percent. That’s less than a third
of Goldman CEO Lloyd Blankfein’s annual pay, Business and
Investors Against Tax Havens points out.
It’s not just fi nancial companies. Eighty- three of the top 100
largest publicly traded companies park money in offshore tax