How Big Business Buys The Right To Dodge US Taxes

You can’t get mad at a company for doing every legal thing possible to make a buck, right?  That’s the typical response when companies like Burger King or Chiquita Banana use tax loopholes to take their companies overseas (at least on paper), or when firms like Apple, Google, or General Electric find ways avoid taxes on billions of dollars of global income. It may be bad for US taxpayers but, hey, blame lawmakers for doing such a crappy job; the companies are just following the rules that have been created for them.

But this is a naive way to think about how companies and legislators interact. Congress doesn’t fill the tax code with loopholes on a whim or even on accident—it does so because companies and their lobbyists spend millions of dollars influencing legislators to write, and maintain, a tax code that suits them. That means protecting loopholes that allow companies to defer taxes on foreign income (and allows them to define as much of their income as possible as foreign). These structures, in turn, have created the stockpiles of offshore cash that make a merger-related move to a foreign jurisdiction so lucrative, and so tempting.

Lobbying is a roughly $3.2 billion-a-year industry in the US capital, according to data collected from lobbying disclosures by the Center for Responsive Politics. Just in the first half of this year, 1,802 different parties hired lobbyists to talk to Congress just about the tax code; it was the second-highest lobbied issue, after spending and appropriations. That number isn’t all corporations—some of it reflects public interest lobbying—but the bulk of lobbying expenditures comes from large companies and their representatives...