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Documentary Tackles Corporate Tax Evasion

"We're Not Broke" screening in Arlington makes taxation a question of justice.

— In Karin Hayes and Victoria Bruce's documentary film, "We're Not Broke," which played to an audience in the Arlington County Library June 25, makes the case that taxes are not America's problem. It is who is and who is not being taxed that is.

"Taxes are not a bad thing," said filmmaker Bruce, who's message is being spread in a 21 city film tour, "they provide a lot of important things for society."

The subject of "We're Not Broke" is the lack of taxes paid by many large corporations. Citizens for Tax Justice and the Institute on Taxation and Economic Policy's report, “Corporate Taxpayers and Corporate Tax Dodgers, 2008-2010,” profiled 280 of America’s most profitable companies finds that 78 of them paid no federal income tax in at least one of the last three years. Thirty companies enjoyed a negative income tax rate over the three-year period, despite combined pre-tax profits of $160 billion.

Directors Bruce and Hayes did not originally intend to make their film about the growing amount of tax evasion among Fortune 500 companies. "We originally thought it would be about individuals who held their money offshore," said co-director Victoria Bruce, speaking about her journalistic process, "but when we talked to the experts, they pointed us towards the corporations."

The numbers astonished the filmmakers. "The U.S. has the highest statutory corporate tax rate in the world," said Nicole Tichon of Tax Justice Network USA, who aided the filmmakers and was present on Monday night's screening, "which on paper is true. But in actuality it is not."

The documentary detailed how many multinational companies evade the corporate taxes, so that the statutory 39.2 percent is misleading. In fact, a report by the Congressional Budget Office states that the average corporate tax rate for domestic profits is 12 percent.

Specifically, the film revealed how a company such as General Electric can have offshore subsidiaries in countries with low or no corporate tax rates. Oftentimes, these large multi-billion dollar companies will have little more than a shipping address in a country such as the Cayman Islands or Ireland in order to evade taxes.

Similarly, many companies avoid the federal income tax by reporting earnings from overseas. Therefore, a company like Apple that has most of its employees and profits in America can report as much as 70 percent of its earnings overseas. This strategy is even easier for technology companies to do, since many of their products are not physical goods.

"Many companies are even getting negative tax incomes," said Bo Shuff, chief of staff at Progressive Congress, "because they say they are saying they are being taxed overseas."

To maintain this system of tax evasion, companies now dedicate an arsenal of lobbyists to influence politicians. "It's a self-feeding cycle," said Shuff, "corporations can make profits and dodge taxes and therefore spend money on lobbying."

The film bemoans the Supreme Court's Citizen's United decision, regarding it as a step in the direction of increased corporate influence in politics. The decision ruled that campaign donations is a form speech that is protected under the first amendment and that therefore corporate entities can donate unlimited amount of money to political campaigns.

But despite the bleak outlook, the filmmakers and others involved in corporate tax justice are optimistic. They point to the recent Occupy movement and other smaller campaigns throughout the country as glimmer of hope.

More importantly, they recognize the fact that a niche issue such as corporate tax evasion has now shifted into the public sphere. "Now when I say tell your senator to close corporate tax loops, you actually know what I'm saying," said Bruce.

When asked if she planned to make any more movies about political or economic issues, Bruce said: "I would definitely not rule it out. But I feel like this is more about a social issue. It's more about the moral fabric. I think it's less important to pay our billionaires than it is to teach our children."