On Monday, the Archbishop Bishop of York charged that individuals and corporations that avoid paying taxes are robbing God, just days before the G8 nations announced a plan to crackdown on global tax evasion. Companies “should have a conscience which says that a child is dying tonight because of some of their actions,” John Sentamu said: “It is sinful, simply because Jesus was very clear; pay to Caesar what belongs to Caesar and to God what belongs to God.”

Sentamu’s comments are a veiled reference to companies like Apple, Starbucks, and Google, which use complicated webs of foreign tax shelters and other gimmicks to lower their tax bills at home and abroad.

A recent report found that 30 of the largest American multinationals with more than $160 billion in profits paid zero in U.S. income taxes over a three-year period, while revelations of low rates overseas paid overseas sparked outrage in Great Britain and raised concerns across Europe.

Leaders of the G8 nations agreed on Tuesday to institute changes that will require shell companies to be more transparent about the “beneficial ownership” of businesses and share information about “who benefits from the operations of shell companies, special purpose companies and trust arrangements often employed by tax evaders.” Countries are also encouraged to close loopholes that allow for tax avoidance.

Experts see “Ireland, the Netherlands, and Luxembourg as the worst actors on corporate tax avoidance, but larger European players including the U.K. have reduced various rates in ways that encourage tax avoidance.” The policies perpetuate a race to the bottom “in taxing many of the world’s richest companies, chased by regressive sales tax hikes and public service cuts to maintain some fiscal balance.”

Apple, which uses a system of subsidiaries to avoid taxes, claims that it “has conducted all of its business with the highest of ethical standards.” But Sentamu warned that companies avoiding taxes are “not only robbing the poor of what they could be getting, they are actually robbing God, because God says ‘bring into my store house all the tithes.’”

“So if God has told us to be just, to walk humbly and to be merciful and then we behave in a very strange way – God is being robbed, the world is being robbed, your neighbour is being robbed,” he said.

A new coalition of 42 U.S. business leaders launched Tuesday to promote lowering corporate tax rates, the same day that analysts at the Economic Policy Institute (EPI) released a report showing there is no evidence that higher corporate taxation is associated with lower economic growth.

The Alliance for Competitive Taxation (ACT) features the heads of Google, Bank of America, Dow Chemical, Coca-Cola, UPS, Walmart, and 36 other major American companies. On their website, ACT endorses reducing the corporate tax rate to 25 percent, while closing loopholes to keep the overall package revenue neutral. The group is advised by former Congressional Budget Office (CBO) director Douglas Holtz-Eakin, who also runs the conservative American Action Forum, and former Chair of President Clinton’s Council of Economic Advisers Laura Tyson.

A “Myths vs. Facts” page on their site labels the statement “Businesses go abroad to avoid taxes” a “Myth,” while a week before the site launched, Apple executives were before a Senate panel explaining how they’d used Irish subsidiaries to avoid paying taxes on tens of billions in profits. Elsewhere on the site, ACT quotes Dr. Tyson as saying that “our current corporate tax system is standing in the way” of economic growth.

Meanwhile, EPI economist Thomas Hungerford explained in a report Tuesday that the supposed link between corporate tax rates and growth rates does not hold up to scrutiny. After examining the question from various directions – statutory tax rates, effective rates, effective rates on capital income overall rather than corporate income, inserting a one-year lag in the data to see if the putative growth effects were being hidden – Hungerford concludes that “there is no apparent association between the statutory corporate tax rate and economic growth.”

Big corporations have been stockpiling cash rather than investing in expansions to their operations for years, but a report Thursday indicates that recovery-bridling behavior is worsening in 2013. Cash hoarding sped up in the first quarter of the year, and American companies are now holding a record $1.73 trillion on the sidelines. According to Bloomberg, the turnaround in corporate investment attitudes owes largely to political instability and congressionally-inflicted economic wounds. Businesses were slowing their cash buildup, but “That changed in last year’s second half, with the U.S. presidential election under way and Congress struggling to reach a compromise on the federal debt as automatic budget cuts loomed.”

Rather than encouraging greater private-sector spending, which Republicans insist is the natural consequence of cutting government spending, the shift to austerity in the U.S. has companies sitting on their hands. That slowdown in corporate investment could lock the economy into below-average growth, Bloomberg adds. In other words, corporate hoarding is both a symptom of shaky economic growth and a contributing factor to it.

As corporate America withholds investment, it’s also achieving record profits, paying record CEO salaries, shrinking the portion of the pie that goes to workers, and sending rock-bottom amounts to the Treasury in taxes. This chart from The Economist shows that while profits have vaulted back above their pre-recession highs, corporate tax payments haven’t:

There is some international momentum for revising the corporate tax code. But with conservatives continuing to demand further cuts in the United States, and European leaders unwilling to enact stimulus even as they acknowledge the failure of austerity, western policymakers do not seem prepared to take all the steps that corporate America’s actions suggest are necessary.

One day after a Senate hearing during which Apple executives explained how they avoid nearly all taxation on tens of billions in international sales, European leaders are reportedly reshuffling an agenda summit to zero in on corporate tax avoidance:

The four-hour summit was originally called to discuss energy policy, but investigations in Britain, France and the United States exposing how little tax major international companies have been paying by carefully structuring their European operations has forced the issue to the top of the agenda.

France and Britain in particular have grown concerned by the sheer scale of the legal tax schemes, with a U.S. investigation revealing on Monday that Apple Inc had paid just 2 percent tax on $74 billion in overseas income, largely by exploiting a loophole in Ireland’s tax code.

That followed reports that the British unit of Amazon paid just $3.7 million tax on 2012 sales of $6.5 billion, and similar revelations concerning the UK operations of Google and Starbucks.

The summit is unlikely to produce immediate action, but there are two opportunities on the horizon to refine an international consensus on corporate tax reform. The next G8 summit is in June, and takes place in Ireland, whose crucial role in tax evasion schemes by multinationals was central to the Apple hearings on Tuesday. And in July, the Organization for Economic Cooperation and Development will put out an “action plan” on tax avoidance.

International coordination in Europe is crucial if any curbs on corporate tax dodging are to be effective, as a pair of recent Bloomberg stories indicate. The continent is so central to the tax schemes employed by Apple, Google, and others that tax lawyers have coined nicknames like “the Double Irish” and “the Dutch Sandwich” for specific profit-shifting gambits.

And while Europe’s leaders publicly decry their neighbor states’ efforts to lure corporations through tax law, they also try to outdo their neighbors. Experts point to Ireland, the Netherlands, and Luxembourg as the worst actors on corporate tax avoidance, but larger European players including the U.K. have reduced various rates in ways that encourage tax avoidance. The result is a race to the bottom in taxing many of the world’s richest companies, chased by regressive sales tax hikes and public service cuts to maintain some fiscal balance. The result, Bloomberg’s Jesse Drucker writes, is that “individuals rather than businesses are often bearing the brunt of higher taxes.”

European powers are illustrating the inherent weaknesses of the territorial approach to reform which Apple’s CEO Tim Cook advocated in Tuesday’s Senate hearing. This summer’s G8 meeting and OECD release are opportunities for the sort of paradigm shift that was absent in Cook’s testimony, from failed territorial approaches to a destination-based system of corporate taxes that could both stem the tax avoidance tide and encourage companies to invest more heavily in creating jobs at home.

Apple CEO Tim Cook testified Tuesday before the Senate Permanent Subcommittee on Investigations, following that panel’s report that Apple has avoided tens of billions of dollars in U.S. tax liability through complex, lawful multinational structures. Cook was the latest head of a major technology company to face Senate scrutiny for its corporate tax behavior, after the same panel summoned Microsoft and Hewlett-Packard executives in September 2012.

Just as his competitors did before the same Senate panel last fall, Cook defended his company’s tax strategies as both legal and in his shareholders’ interests. Cook’s endorsement of corporate tax reform was more specific than the broad support Microsoft executive Bill Sample offered last year. But his support for lowered rates, closed loopholes, and doctrinaire reforms is unlikely to take the heat off the eye-popping tax behavior that inspired the hearing.

The panel’s investigation found, with Apple’s cooperation, that the company’s three Ireland-based subsidiaries “have no tax jurisdiction at all,” as The Guardian explains, allowing it to shelter tens of billions in sales from not just U.S. but all taxation.

The complex arrangement includes three subsidiaries, based ostensibly in Ireland, which appear not to be designated as tax resident anywhere, the committee said. A source on the committee called them “iCompanies – I for imaginary, invisible”.

The commitee said that the arrangement, described by one senator as “the epitome” of tax-avoidance schemes, allowed Apple to pay only very small amounts of tax on much of its overseas profits, thanks to the Irish companies that exist “nowhere” for tax purposes. […]

One of those Irish affiliates, Apple Sales International (ASI), reported sales income of $74bn over four years but paid hardly any tax. In 2011 ASI had pre-tax earnings of $22bn but paid just $10m in tax, a rate of 0.05%.

Citizens for Tax Justice says Apple is holding fully $102 billion in untaxed offshore cash. The Financial Times notes Apple is careful to maintain appearances, however. It’s reported tax rate of 25.2 percent for 2012 “is an accounting entry and has no effect on the actual amount of taxes paid,” which amount to more like a 15 percent effective tax rate.

Throughout the hearing, both senators and witnesses repeatedly acknowledged that Cook and his fellow executives are indeed operating within the law. The dispute is over how policymakers should respond to a corporate tax code so riddled with loopholes and bad incentives that Apple and other multinationals behave in this way. As corporations have manipulated the flaws in that tax code and payroll taxes have increased, working people have replaced companies as a primary source of tax revenue:

One response to the flawed corporate code, supported by many businesses, would be to offer a tax holiday on repatriated profits currently sheltered overseas. Congress tried such a holiday before, and it was a massive failure. Cook’s rejection of this approach was heartening, but the rote ‘simplification’ of the system he repeatedly endorsed amounts to what’s known as a territorial approach, whereby loopholes are closed and the tax code is rewritten such that companies pay U.S. taxes on U.S. revenues.

For all their simplicity, such territorial systems encourage an international race to the bottom on corporate taxation, as Europe has discovered. Last week, Bloomberg’s Jesse Drucker detailed the perverse corporate tax outcomes created by European policymakers who talk about making it harder to dodge taxes but whose policies actually make it easier.

Threading the policy needle between race-to-the-bottom territorial policy, tax holiday giveaways, and the current ineffective legal web is quite difficult. But economist Alan Auerbach has one idea, explained in a paper jointly published by the Center for American Progress and the Hamilton Project, that would seem to balance both government and corporate interests. Auerbach suggests that multinational companies pay their taxes only in the countries that use their products, so that moving money across borders doesn’t alter the taxes they owe in any given country. Tim Fernholz of Quartz explains that Auerbach’s idea strips “the ability to move US profits overseas” artificially, as present law has encouraged Apple to do. With a few other tweaks, this could make it more attractive to invest in the U.S.

So far, today’s hearing has not entertained this notion of destination-based taxation on multinational activity. But it’s the sort of Gordian Knot approach to a longstanding, costly policy tangle that might appeal to the head of a company that once made “Think Different” its global slogan.

Fix the Debt, a group of CEOs at some of the country’s largest corporations, has been pushing an anti-debt agenda with stern warnings about the urgent need for deficit reduction. But many of its members have benefitted from a loophole in the tax code that has allowed them to deduct “performance pay” from their executive salaries and thus avoid paying millions in taxes.

A new report from the Institute for Policy Studies and Campaign for America’s Future finds that 90 member firms took in somewhere between $953 million and $1.6 billion through the ability to deduct performance pay from corporate taxes between 2009 and 2011. The report includes the biggest winners of this loophole:

– UnitedHealth Group: This company was at the top of the list, deducting at least $194 million of its total $199 million compensation for CEO Stephen Hemsley during that time period. The report calculates that this works out to a $68 million taxpayer subsidy to UnitedHealth, plus another $10 million tax break for Hemsley’s $28 million performance pay in 2012.

– Discovery Communications: This company came in second, deducting $105 million of a total compensation package of $114 million for CEO David Zaslav from 2009 to 2011. That comes to a $37 million taxpayer subsidy. It got another $9 million tax break for his performance pay in 2012.

– Caesars Entertainment: Even though this company has been losing money in recent years, CEO Gary Loveman made $9.6 million in cash bonuses during that time.

During that three-year period, CEOs and the next three top executives at each of the 90 Fix the Debt corporations were paid a total of $6.3 billion, 75 percent of which was in fully deductible performance pay, equaling $2.7 billion. Depending on how everything was calculated (which is hard to know with current disclosure rules), that comes to about $1.5 million in taxpayer subsidy per executive or $18 million per company.

The group has previously pushed for tax reform that would result in even bigger windfalls for the corporations they represent, potentially netting them $134 billion. Members have also been vocal in calling for cuts to Social Security while themselves enjoying millions of dollars saved in their personal retirement accounts.

As the corporate tax reform debate continues to simmer in Washington, a new report from the Government Accountability Office shows that America’s corporations received $181 billion in tax breaks in 2012, an amount equal to what they actually paid in taxes. That’s the largest total of corporate tax breaks since 1986, and the bulk of the breaks come from two areas: a new provision, enacted in 2011, that allows corporations to write off 100 percent of capital expenses and the long-standing provision that allows corporations to exempt overseas profits from taxation until they return them to the United States.

The increase in claimed tax breaks comes as corporations hauled in record profits last year, largely because they pushed more money into overseas tax havens like Bermuda, the Cayman Islands, and Luxembourg. The largest American corporations now hold nearly $1.5 trillion overseas, and avoiding taxes on foreign profits made up a sizable share of the breaks they claimed in 2012, Reuters reports:

Corporate tax deferral, the potential indefinite postponement of U.S. taxes on profits held offshore, makes up nearly a quarter of that sum, according to a Government Accountability Office report released on April 15, which is the deadline for individuals to file their tax returns.

Even as the amount held overseas is increasing, corporate lobbying groups and congressional Republicans are pushing reforms that would only make offshoring profits easier. A so-called “territorial” tax system, favored by the GOP and corporations, would exempt most foreign profits from any American taxation, providing further incentive to move profits to tax havens. By pushing investment overseas, a territorial system would lead to the creation of 800,000 jobs in foreign countries that could have otherwise come to the U.S., according to one economist.

The push for such system has stemmed from complaints that the U.S. has the highest statutory corporate tax rate in the world, and while that is true, few corporations actually pay it. The U.S. collects less in tax revenue as a percentage of its economy than all but one other industrialized country, and corporate tax levels fell to a 40-year low in 2011 even as profits hit a 60-year high. According to a recent report from the U.S. Public Interest Research Group, corporate tax avoidance cost the average individual taxpayer $1,026 in 2012 alone.

America’s largest corporations have stashed nearly $1.5 trillion in offshore tax havens like Bermuda, the Cayman Islands, and Ireland — countries where they do little business but claim massive profits due to low tax rates. As a result, corporate tax rates fell to a 40-year low in 2011 even as profits rose to a 60-year high.

Tax avoidance from corporations and wealthy individuals has a cost for individual taxpayers and small businesses, according to a new report from the U.S. Public Interest Research Group. According to U.S. PIRG, tax dodging cost individual taxpayers $1,026 and each small business $3,067 in 2012.

Those costs don’t necessarily come from higher taxes; instead, they often come in the form of higher budget deficits or, as they are now, from substantial cuts to public programs and services that benefit middle- and low-income families. “This is a real loss and it’s putting great pressure on the budget and all kinds of investments and programs that the federal government needs to continue to fund,” Michigan Sen. Carl Levin (D) said on a conference call unveiling the report today. Levin has authored legislation calling for the closure of tax loopholes that incentivize the offshoring of profits. “It’s time to close the loopholes, reduce the deficit to protect these important investments in our future, and to bring some fairness back to the tax code,” Levin said.

As corporate tax reform becomes a hot topic in Washington, however, corporations are pushing for reforms that would make it even easier to offshore profits. A “territorial” system, desired by corporations and corporate lobbying groups, would exempt most foreign profits from American taxation and allow corporations to return profits to the U.S. without taxing them. But Dan Smith, the tax and budget director at U.S. PIRG and co-author of the report, said such a system would only make corporate tax dodging worse.
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Japan lowered its corporate tax rate one year ago this week, leaving the United States with the highest statutory corporate tax rate in the world. And as Washington turns its focus to corporate tax reform, groups of corporations aren’t letting lawmakers forget the anniversary.

The RATE Coalition, a group of corporations advocating for lower tax rates, sent top tax writers in the House and Senate a letter today noting the anniversary and renewing their push for lower tax rates, The Hill reports:

“Coupled with our complicated tax system, this rate makes American businesses less competitive and makes the U.S. a less attractive place for investment, ultimately harming businesses, investors, workers and consumers,” 18 executives and a pair of interest group presidents wrote to the top tax writers in both the House and the Senate.

“We know that some choices may be difficult and understand that base-broadeners, such as eliminating tax expenditures, may be necessary to achieve the significant reduction in the statutory rate that is required for the U.S. to better compete globally,” the executives added.

RATE isn’t alone. Business Roundtable, another corporate lobbying group that includes some of RATE’s members, announced plans to spend hundreds of thousands of dollars lobbying for lower corporate tax rates.

But while the companies are correct that America’s corporate tax rate is statutorily the highest in the world, what they aren’t noting is that few corporations actually pay the 35 percent rate. In fact, even as profits for American corporations hit a 60-year high in 2011, their effective tax rate hit a 40-year low, and the U.S. collects less in taxes as a percent of the total economy than every industrialized country in the world save Iceland. It’s been 45 years since corporations paid the full top tax rate, and 26 American companies avoided taxation altogether over the past four years.

Some of RATE’s members do, in fact, pay a rate equal to America’s top corporate tax rate. But corporations as a whole do not, largely because they are keeping record amounts of money in offshore tax havens in countries where they barely do business at all. To top it off, many of the corporations (though not RATE specifically, according to its letter) lobbying for reform are pushing for a “territorial” tax system that would make it even easier for them to shield profits from American taxation while leading to more investment and job creation in foreign countries.