No Taxes - The Cruise Lines' Dirty Little Secret
One of the little know facts about the cruise industry is that it pays virtually no U.S. taxes.
The cruise lines take advantage of an obscure provision in the U.S. tax code which permits shipping companies to evade taxes by incorporating overseas and flying the flags of foreign countries. That's why Carnival is incorporated in Panama, Royal Caribbean is incorporated in Liberia, and Princess Cruises is incorporated in Bermuda.
The New York Times covered the issue of cruise line taxes today:
"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.
.jpg)
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."
I have written about the cruise industry's ability to avoid U.S. taxes since starting this blog.
Carnival was created by Ted Arison (father of current CEO Mickey Arison, photo right). Senior Arison collected billions of dollars from tax paying U.S. passengers and lived the good life in Miami. But he registered his Miami-based cruise line and his cruise ships in Panama to avoid U.S. taxes. In 1990, he abandoned Miami, denounced his U.S. citizenship, and returned to Israel with his billions in a ploy to avoid estate and inheritance taxes.
Whenever I think of cruise tycoons like the Arisons and the foreign cruise lines like Carnival and Royal Caribbean, I can't help but think what a scam they are running.
The Miami-based cruise lines file papers of incorporation and vessel registration in distant countries where no one will bother them with things like income tax, wage and labor laws, or safety regulations. They then collect billions of dollars a year from hard working saps - the U.S. tax paying public.
Like this article? Consider reading:
Cruise Line Fat Cat Billionaires
What the Cruise Industry Has to Learn From My Cousins Back in Arkansas
Credits: Mickey Arison - David Adame AP (via Cruise Blog)
Jim Walker practices maritime personal injury law. Jim has been involved in maritime litigation since 1983. Based in Miami, Florida,
Jim:
I don't know about you but I hate paying taxes.
And now that we are brothers in arms against the wretched cruise lines, we should ensure they pay no taxes!
So there will be more money for us from them !
Now let's get those bastards.
FBP
Wow,no taxes ??
So, no more screw up please !
Discounts for everyone ...
Don't tell me that you don't look for loopholes to decrease the amount of taxesyou pay. Why should they be any different?
By the way, Ted Arison was always an Israeli citizen, so moving back there is a logical step for him. That he made lots of money is his good luck. I'll bet he paid lots of US tax
Howard:
I practice law, not search for loopholes. I have an accountant, comply with the U.S. tax code, and pay around 30% in taxes to the Federal government.
Yes, Arison had dual citizenship, Israeli - U.S. But he gave up his U.S. citezenship and gave up living here. (There is no inheritance tax if you give up your citizenship and leave the U.S. and then die over ten years later.) He died nine years later. Sounds like bad luck to me.
Legally we can't tax foreign (cruise ships)corporations, but we can impose other charges for services rendered...such as medivac's and any other service provided by the US Coast Guard, sanitary inspections by CDC's Vessel Sanitation Program. Make them pay for roads and port expansion to accomadate their business. Walmart usually pays cities to provide access roads and traffic signals. Although they usually name the street Walmart Way. So why not have a Costa Way, Holland America Avenue, or Carnival Lane as long as they pay their fair share of the costs to enhance their business.
No taxes, but Royal Caribbean charges 15% tax onboard .
Who understand this business ...
MoveOn will be picketing Carnivals headquarters, 3655 NW 87th Avenue Miami, FL 33178 on April 18th at 11:30 am.
Events at other locations will be held nationally.
Sign Up at http://pol.moveon.org/event/events/index.html?action_id=242
Come one come all.
We live near the port of Tampa and have been on several RCI and Carnival cruises. They charge us tax, but pay none of there own? And they are not even US based corporations even though they have US based terminals? Good bye Carnival and RCI.
I say if u can find a loop hole not to pay taxes go for it ... Our government screws us every chance they can ... So my thought is go for it /(
The cruise lines charge passengers for taxes and government fees - which they in turn pay to the governments of the countries their ships visit. The cruise lines pay quite a bit in port fees at each port they visit (including US ports). They do not pay much in US federal tax because they are not US companies. Whats the point in this article here? So what? Brazilian underwear companies don't pay US federal taxes either - because they are not US companies. It seems pretty simple to me.
I'm with Howard. If the loophole exists, why not take it? I love Carnival and am proud that an afforable, fun vacation option like cruising is available. I don't consider myself a "sap" as the article says just because my money is going to a corporation that is smart enough to avoid taxes. If the cruise corps had to pay U.S. taxes they would be forced to raise fares. I am thankful that Ted Arison took the risks to build his company. I also think it is awesome that Carnival provides thousands of jobs to people, some which are most likely from poor countries with little opportunity. The crew members that I have spoken with personally seem like grateful, hardworking people who sacrifice time with their families and personal comfort to give those at home a better life. The cruise industry has also created many jobs at ports-of-call in poor countries.
Personally, I would rather these companies get the benefit of the loophole than for the U.S. to squander money on lazy, ungrateful people and handouts to foreign countries.
Hello,
No "Fair Share" of Taxes on Total Revenues Earned ! Major Ocean Polluters along with the US Navy, and Merchant ships etc. Will This Tax Loophole ever be Closed ? Heaven Help Us All !
My son worked on one of Carnival Cruise vessels registered in Panama. He is a US citizen and his payroll stub shows a deductions for federal taxes. Where the heck did that money go??? Should he be expecting a W-2 to file through IRS or does he need to go through Panama for his return? Either way, he's entitled to a full refund.
I'm sure these questions need to be directly addressed to CCL or the IRS but before I throw myself into that frustrating process, I wanted to see if anyone else had any insights.
Incidentally, their hiring process is deceitful and working conditions deplorable to say the very least. I can go on and on about that alone but I'll stop here.
Thank you in advance for any advice and with the kindest of regards,
Miya.