NYTimes and Corporate Offshore Profiteering and Tax Evasion
Peenies, Peenies, Peenies, My Name is Chuck and I love McSweenies'
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Subject: NYTimes and Corporate Offshore Profiteering and Tax Evasion
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This is not the half of it (below).
Robert Woods Johnson, the Mayo Clinic,
Yale, NYMC, Insurance company "non-profits" like
The Blues and Kaiser, are falsifying information
they obtain with US research grants and giving
Americans bullshit science.
To Wit:
It was at Mayo Clinic that the bad boys of Lyme
learned to play Primers Roulette (conveniently
looking for the wrong DNA in humans infected with
vector-borne diseases, while using the right DNA
when looking for organisms in ticks to patent).
Mayo's Dave Persing went on to work at Corixa,
which is a company central to the Lyme RICO
racketeering crime.
Corixa, for their participation in the Lyme and LYMErix
scam, was awarded an NIH "Biodefense Partnership"
contract.
I sent all the Lyme criminals' bullshit to every embassy of
every large and influential nation in the world, since the US
Department of Justice refused to prosecute Yale et al.
I'll be damned if I let this abuse of Americans leak out
of our borders to other peoples and nations of the world.
I'm an American, after all.
Although there seems to be only a handful of us real
Americans left. (It's like a do-over of the Sodom and Lot
story.)
Corixa was later re-absorbed by SmithKline, which is
a British company and therefore could be tried at the
Hague for international scientific fraud and racketeering.
As I said before, if the US does not jump on this kind of
biotech corporate fraud, other nations could nail them and
take all their due profits, rather than America.
Constitution Gonzo does not seem to care, and neither
does the Corrupticut US Attorney, Kevin J. O'Connor.
They must *enjoy* being pissboys for the Corporate Kings
and the NeoCon/AEI warmongering cowards.
Who knows how Gonzales and O'Connor get their jollies,
really, but their behavior is a sure sign of intellectual and
emotional retardation.
Persing explains what later became Primers Roulette:
J Infect Dis
. 1994 Mar;169(3):668-72. Links
Target imbalance: disparity of Borrelia burgdorferi genetic
material in synovial fluid from Lyme arthritis patients.
* Persing DH, *************
* Rutledge BJ,
* Rys PN,
* Podzorski DS,
* Mitchell PD,
* Reed KD,
* Liu B,
* Fikrig E,
* Malawista SE.
Department of Laboratory Medicine and Pathology, Mayo Clinic and
Foundation, Rochester, Minnesota 55905.
Lyme arthritis is a late manifestation of Lyme disease that
results in episodic synovial inflammation and swelling. Although this
process is thought to be driven directly by the spirochetal etiologic
agent, Borrelia burgdorferi, the organism itself has been recovered by
culture only twice. In contrast, polymerase chain reaction (PCR)
studies are usually positive. This apparent discrepancy in 19 culture-
negative synovial fluid specimens from 18 patients with Lyme arthritis
was investigated. In all 19, DNA sequences characteristic of plasmid-
encoded genes OspA and OspB were easily detected. However, despite
equivalent or even superior analytic sensitivity for detection of
cultured organisms, the reactivity of two genomic DNA targets was
often weak or absent altogether in the clinical specimens. This
apparent overrepresentation of B. burgdorferi plasmid sequences was
found exclusively in clinical specimens and not in cultured organisms.
The physiologic imbalance of genomic and plasmid DNA reactivity in B.
burgdorferi infection may signal an underlying pathogenetic mechanism.
PMID: 8158048 [PubMed - indexed for MEDLINE]
Published on Saturday, February 24, 2007 by the Inter Press Service
Corporate Profits Take an Offshore Vacation
by Lucy Komisar
NEW YORK - Last week, Merck, the pharmaceutical multinational,
announced that it will pay 2.3 billion dollars in back taxes, interest
and penalties in one of the largest settlements for tax evasion the
U.S. Internal Revenue Service (IRS) has ever imposed.
What Merck did isn't unusual but in fact is becoming common for
multinationals in the era of globalization. It's one of the ploys in a
corporate bag of tricks called profit laundering.
Merck had cooked its tax books by moving ownership of its drug patents
to its own Bermuda shell company -- an entity that has no real
employees and does no real work -- and then deducting from U.S. taxes
the huge royalties it paid itself. While setting up a shell company is
not inherently illegal, it is if tax authorities determine that its
only purpose is to evade taxes. Bermuda is a tax haven that has no
levy on royalties.
Merck also faces legal action in Canada for 1.8 billion dollars in
back taxes and interest.
What Merck did isn't unusual but in fact is becoming common for
multinationals in the era of globalization. It's one of the ploys in a
corporate bag of tricks called profit laundering. A company figures
out how to move its book profits offshore so it can evade millions and
even billions in taxes to the country where it really operates. In an
era where much of a company's assets may be intangible intellectual
property -- patents, logos, manufacturing processes -- this strategy
can make reported profits and taxes disappear.
People understand that nations' economies are hurt when jobs move
overseas. But what happens when intellectual capital, on which the
increasingly knowledge-based economy depends, is also moved out?
IRS Commissioner Mark Everson said last June, "Tax issues associated
with the transfer of intangibles outside the United States have been a
high risk compliance concern for us and have seen a significant
increase in recent years. Taxpayers, especially in the high technology
and pharmaceutical industries, are shifting profits offshore."
The cost of manufacturing drugs or computer technology is minimal
compared to the cost of research and development. So, beginning in the
early 1990s, several dozen pharmaceutical and computer companies
established subsidiaries in Bermuda and other tax havens to game the
system.
They set up shell companies and transferred patents or logos or other
intangible property there. Then, when profits rolled in, the company
paid big license fees or royalties to its own shell -- at the price it
decided -- and deducted that from home taxes. Revenues were sucked out
of the U.S. or other countries even though the patents were created
and were still used for work within home borders.
Although almost 60 percent of U.S. pharmaceutical companies' sales
take place in the U.S., where the government's refusal to control drug
prices makes profits higher than elsewhere, the companies report to
the IRS that their profits come largely from international sales. The
world's biggest drug firm, Pfizer, with most of its sales in the U.S.,
said that in 2004 it had 4.4 billion dollars in pretax profits in the
United States and 9.6 billion dollars internationally.
Last year, Martin Sullivan, a former U.S. Treasury Department
economist, noted in the journal Tax Notes that pharmaceuticals had
accelerated their movement of profits to low-tax jurisdictions. He
wrote that "In 1999, foreign profits accounted for 39.2 percent of
worldwide profits of large U.S. drug companies. By 2005 that
percentage had jumped to 69.9 percent."
He figured that the companies' foreign assets were 41 percent and
their sales 43 percent of the world total, so that foreign profits
should be 43 percent. But the companies reported them as 66 percent,
cheating the U.S. of 23 percent of profits. That amounted to nearly
three billion dollars a year from nine drug companies, including
Merck, which cut 1.5 billion dollars from its taxes over a decade.
Prime technology companies playing the offshore game are Microsoft and
Google. Microsoft gets about 75 percent of its 40 billion dollars in
revenue from licensing fees. A few years ago, it set up an Irish
subsidiary called Round Island One Ltd. to own its 16 billion dollars
worth of copyrights on software developed in the U.S.
In 2004, it shifted nine billion dollars in profits to Ireland and
thereby avoided paying some 500 million dollars in U.S. taxes. Using
the Irish company, Microsoft also avoids taxes elsewhere in Europe,
the Middle East and Africa. The maneuver helped Microsoft drop its
worldwide tax rate from 33 percent to 26 percent.
Google similarly set up an Irish subsidiary, Google Ireland Holdings
Ltd, which in 2004, its first year, helped the company avoid paying
about 131 million dollars in U.S. taxes. Google noted in its annual
report that year that it expected its effective tax rate to drop even
more significantly. It explained, "This is primarily because
proportionately more of earnings in 2005 compared to 2004 are expected
to be recognised by our Irish subsidiary, and such earnings are taxed
at a lower statutory tax rate (12.5 percent) than in the U.S. (35
percent)."
Both companies may have some minimal operations in Ireland, but the
issue is how much value they allot to that jurisdiction for tax
purposes.
IBM didn't use an offshore shell but shifted royalties to another
operating location. According to The (London) Observer, whistleblower
Gerard Churchhouse, a former IBM marketing manager, revealed that in
the early 1990s, IBM U.S. was losing money, so IBM UK transferred
artificially high royalties to the U.S. company. He said it thereby
evaded as much as 1.4 billion dollars in British taxes. Churchhouse
said he was fired for raising the issue with his bosses. IBM refused
to confirm or deny his story, but in 2001 it paid the British Inland
Revenue about 1.4 billion dollars to settle claims of tax evasion.
The situation is getting worse. According to Sullivan, U.S. Commerce
Department data show that U.S. companies increased the profits
assigned to 18 tax havens by 68 percent, from 88 billion dollars in
1999 to 149 billion dollars in 2002. He said the increase in offshore
profits was not related to increased economic activity and that,
"subsidiaries of U.S. corporations now generate profits mainly in tax
havens rather than in locations in which they conduct most of their
business."
The result of this and other sorts of tax trickery is that nearly two-
thirds of the companies operating in the United States reported owing
no taxes from 1996 through 2000, according to a 2004 report by the
investigative arm of Congress, the Government Accountability Office.
Jack Blum, an expert on tax evasion and former counsel for the Senate
Foreign Relations Committee, said, "Since the 1960s the percentage of
tax revenue at the federal level that comes from corporations has
declined from around 30 percent to around 8 percent. A substantial
portion of this decline is the consequence of the ability of companies
with global operations to shift income to jurisdictions where tax
collectors cannot find it."
The U.S. Treasury and IRS say they are reviewing accounting rules on
transactions involving intellectual property, but the U.S. government
has failed to adopt tough measures to end royalty-shifting.
Most of the 2.3 billion dollars Merck has to pay is back taxes and
interest; only 100 million dollars is penalty. No Merck official has
been charged with a crime. That signals that companies have little to
lose by continuing their tax scams.
The Financial Times reported in 2004 that Merck "would have failed to
meet consensus earnings forecasts without the improved [tax] rates."
Merck may think it took a profitable risk.
Lucy Komisar is a New York-based investigative journalist writing a
book on the international impact of the offshore bank and corporate
secrecy system.
© Copyright 2007 IPS - Inter Press Service