Everybody knows that Congress is in gridlock. Lawmakers have been declaring that they will make no concessions. No concessions means no compromises. This does not instill confidence that progress will be made on either raising the debt ceiling before the August deadline or that revenues and expenditures will be soon brought into line with hard financial reality.
So it is increasingly remote that Congress will do what Warren Buffett said he would do and assume some responsibility for the country's financial well-being. Fellow Fool Morgan Housel brought our attention to Buffett's wild idea for helping the U.S. meet its debt obligations, if only as a stop-gap measure. Buffett suggests that corporations voluntarily prepay some of their taxes months ahead of their due date. Of course, he says, this would only bring in enough revenue for a day or two of breathing room.
That certainly is a noble thought, and I don't doubt that Buffett's company, Berkshire Hathaway
But everyone's doing it
Other companies also use overseas tax loopholes to save themselves tons of money. Take Microsoft
Letting the fox in the henhouse
President Barack Obama promised during his campaign that he would close "corporate loopholes and [shut down] tax havens" that lowered the corporate share of U.S. tax revenue from 30% in the mid-1950s to 6.6% in 2009. But guess who he appointed as the chairman of the President's Council on Jobs and Competitiveness? None other than Jeffrey Immelt, CEO of General Electric. Part of Immelt's mandate as chairman of the council is to discuss corporate taxes. If anyone should know about corporate taxes, it's Immelt, I guess. But is his perspective in the best interests of the United States or GE?
During his campaign, the president also said, "We can end tax breaks for companies that ship our jobs overseas and give those breaks to companies that create good jobs with decent wages here in America." The GE connection in that regard is also not promising: In the last nine years that company has eliminated 20% of its domestic workforce while increasing its overseas employees.
Warren Buffett is no (lower-case) fool. He didn't get where he is today by throwing his money away, and I'm sure his accounting department is going to take advantage of any edge the tax laws give them. But at least he realizes that a responsible corporate community is one that will not run away from its hometown obligations. That is the cost of doing good business. Congress, are you listening?