Guess what? The Obama Administration is considering ways to close corporate tax loopholes and reclaim billions upon billions of dollars in lost taxes for the Treasury Department.
Will this latest storm of strum and drang about "corporate welfare" and tax reform, a standard sound bite of every new White Administration -- or at least every new Democratic Party White House Administration -- actually result in any meaningful changes to the tax codes. Well, the jury's still out -- way out -- on that one. But if history is any guide, this latest crusade, which features ex-Federal Reserve Chairman Paul Volcker as the man on the white horse who leads the charge, will probably generate a fair number of headlines and very little action.
According to news reports, one of the major areas the bi-partisan presidential task force is looking at is an alleged tax code bias that penalizes corporations which generate investment capital via security sales and favors those which use tax-deductible debt issues to raise funds.
Another area reportedly under study is the current policy of taxing corporation on their global income rather than their profits in the United States. According to opponents of the current system, corporate deadbeats are able to easily scam it by opening shell subsidiaries in offshore countries whose banking and finance laws have been custom tailored to provide tax havens for U.S. firms. Once the money-laundering subsidiaries are established, the U.S.-based parents transfer billions in U.S. earned income to them as "working capital" to evade having to pay taxes on them.
Interestingly, the particular bit of corporate welfare only became known to anyone outside the Washington beltway and Fortune 1000 executive offices last year when the loophole proved to be big enough for Citibank to drive approximately $21 billion through it so that it could sit -- tax free -- in the Bahamas bank accounts of a Citibank subsidiary headquartered in a mail drop at the exact same time that Citibank was ripping off billions in taxpayer bailout funds by fraudulently claiming it was near bankruptcy.
Since a lot of very, very big players are known to make use of this particular tax avoidance scheme, it is unlikely, according to many tax reform activists, that the current probe will result in anything but a total whitewash of the practice.