Accelerated Race to the Bottom

Something extraordinary happened today. While much of corporate America’s efforts to avoid paying taxes has been kept out of the public eye, Apple CEO Tim Cook went before a Congressional Committee and not only seemed to accept the incredible figures related to his companies tax avoidance (Somewhere north of $100 billion stashed in Ireland where there is less than a 2% rate) but also sought to pressure US lawmakers into lowering the corporate tax rate here or else he’d continue the practice. I wrote a few months ago about the race to the bottom as far as subsidies for businesses, something which ironically Apple has received millions of dollars of tax payer dollars for while also orchestrating these tax avoidance schemes, and their affect on the US economy as well as social conditions for the people. Today reveals another very concerning trend that fits under the ‘race to the bottom’  category; the pursuit of corporate tax dollars by money starved governments has created a race to the bottom of tax rates. 

This is really discouraging for a few reasons. First and foremost, this race to the bottom starves government budgets of dollars used for social programs that we are now seeing cut due to the current sequester efforts. Incredibly, against this backdrop of ‘Tighten your belts’ for the working class, corporations continue to receive billions in subsidies while also using schemes to avoid billions in taxes. In the committee Q&A, Senator McCain mentioned that as much as $1 trillion in taxable earnings may be stashed off shore. With a budget deficit of around ~$650 billion, if this money were to be taxed according to the law we’d be in much better shape financially. Instead, we are slashing social security, medicare, medicaid, education, and research and development spending left and right – all with a tremendous social cost.

Secondly, Cooks near arrogance at going in to this committee hearing and suggesting the United States should lower its corporate tax rate in to the single digits shows the ability for multinational corporations to apply pressure to governments. With a deal with the government of Ireland hatched in 1980, Apple can funnel money to it’s Irish subsidiary that pays less than 2% in corporate tax. While APple rightly points out that it is not the worst when it comes to tax avoidance, the idea that a corporation has the ability to ‘choose’ what taxes it will pay and what taxes it will avoid is just plain wrong and certainly something an individual can not get away with.

This brings me to my third point. Corporations have for decades fought for the right to be granted individual rights, known as corporate ‘personhood.’ With the Citizens United decision in 2010, corporations could now express their ‘free speech’ right through unlimited campaign donations, significantly altering the campaign balance of power shifting it from people to these multinational corporation groups and very large donors. Now, ironically, corporations don’t want to pay a similar tax rate to the very people they’ve been trying to be equal with in a rights sense for decades. It seems to plainly be a desire to receive all the benefits of personhood without any of the responsibility; such fundamental responsibility as paying ones proper taxes.


The tax situation in the United States is in a dire condition. As the United States has become more revenue starved, corporations have been able to manipulate and stretch the laws around the globe to avoid paying taxes and gain tremendous leverage over world governments. Without a common consensus among world governments to set some type of tax standard, corporations will be able to continue to use their considerable leverage to pressure various governments into lowering their corporate rates, leaving tax paying citizens holding the bag.


Here’s a great article by the Guardian on Apple CEO Tim Cooks testimony today and the significance it has for all of us;




corporations have won the recogniz


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