One of the companies involved in last year’s Gulf oil spill is taking heat from "60 Minutes" over how it pays corporate taxes each year. Transocean, who owned the Deepwater Horizon rig that blew out last year in the Gulf of Mexico, was one of the subjects of Lesley Stahl’s investigation on overseas' tax havens for large companies.
Transocean moved its headquarters from Houston to Zugg, Switzerland, two years ago, in a move that was more ceremonial than physical, according to an interview Stahl did with Rep. Lloyd Doggett (D-Tex.).
"I'm not sure they even moved that much. They have about 1,300 employees still in the Houston area. They have 12 or 13 in Switzerland," Doggett told Stahl.
"And yet they claim that they're headquartered over there?" Stahl responded.
"They claim they're Swiss. And they claim they're Swiss for tax purposes. And by doing that, by renouncing their American citizenship, they've saved about $2 billion in taxes," Doggett explained. Stahl, for her part, actually paid a visit to the Transocean “headquarters” in Zugg, in a pretty funny video that I posted below.
The Doggett interview was telling, as it highlighted a real challenge for the makers of American tax policy. On the one hand there is an argument to lower the corporate tax rate in an effort to encourage companies like Transocean to claim they are headquartered back in the United States. But lowering the corporate tax rates, while popular with large corporations, is likely to lower overall revenue in the United States during a time of high deficits, high debt and high unemployment. It’s a game of tax policy Whac-A-Mole.
Most folks want companies like Transocean to pay their fair share. But lowering the corporate tax rate to encourage them to pay their fair share is likely to have negative effects on the United States’ revenue base as a whole. This wouldn’t do much to solve our high deficit, debt and unemployment problems, especially when countries like Transocean are only employing about a dozen people outside of the U.S. So fixing one problem will just lead to another. Like I said, it’s a game of Whac-A-Mole.
This is not an easy problem to fix. Should our corporate taxes be competitive with other nations to keep our nation’s companies and their taxes here? But if lowering these taxes puts us in a worse economic place than we are in, is this worth it?