Despite using public ports, Coast Guard assistance, federal customs operations and tax-payer funded roads and bridges, Carnival uses a tax loophole that allows companies incorporated overseas to avoid U.S. taxes, even if the bulk of their operations are based in the states. The New York Times reports that between 2008 and 2011, 26 major corporations in the U.S. managed to pay no income tax, despite making $205 billion in pre-tax profits.
Carnival’s “cruise from hell” — during which the ship lost power off the Yucatan peninsula and was stuck for days, leaving passengers no recourse to relieving themselves in plastic bags — finally ended as the crippled boat was tugged into port.
Carnival will be refunding money to the passengers of the ill-fated cruise and offering them a free trip in the future. But one entity to which Carnival has not been giving any money is the national treasury — as the New York Times’ David Leonhardt reported, the company has paid just a 1.1 percent rate on 11.3 billion in profits over the last five years:
The Carnival Corporation wouldn’t have much of a business without help from various branches of the government. The United States Coast Guard keeps the seas safe for Carnival’s cruise ships. Customs officers make it possible for Carnival cruises to travel to other countries. State and local governments have built roads and bridges leading up to the ports where Carnival’s ships dock.
But Carnival’s biggest government benefit of all may be the price it pays for many of those services. Over the last five years, the company has paid total corporate taxes — federal, state, local and foreign — equal to only 1.1 percent of its cumulative $11.3 billion in profits. Thanks to an obscure loophole in the tax code, Carnival can legally avoid most taxes.