Carnival Cruises pays paltry 0.6% in US taxes – let it rescue its own ships

Carnival Cruises should start paying its fair share, according to US Senator Jay Rockefeller (D-WV).

You see, Carnival smartly registers its boats in foreign ports, so they only pay only 0.6% a year in US taxes.

Yet, every time a Carnival ship has a problem at sea, who do you think comes running to the rescue?  The US Coast Guard. And it’s costing US taxpayers millions.

Well, Senator Rockefeller has had enough, and is demanding that Carnival start paying its own way.

A Whopping 90 Distress Calls from Carnival Cruises

If Carnival ships are going to have a whopping 90 distress calls over a five year period, costing US taxpayers millions – while Carnival pays next to nothing in US taxes because it doesn’t consider it’s an American company – then Carnival can start paying for its excessive number of rescues, says Rockefeller.

Carnival Cruise Ship

Carnival Cruise Ship

Rockefeller said in a letter to Carnival that even after so many accidents, “I see no evidence that the company has undertaken any meaningful course of corrective action to improve its safety record.”  In other words, it’s Carnival’s fault that the Coast Guard and US Navy have to spend millions bailing them out of trouble, so Carnival should pay for it.

US Taxpayers Paid $3.3m for A Single Carnival Cruise Rescue

And the costs are darn high.  Rockefeller says that for one recent Carnival rescue it cost the US Coast Guard and US Navy $1.5 million and $1.8 million respectively.

Carnival responded and basically told the Senator to shove it.

In recent months, Carnival Cruise lines have been in the news a lot for all of the wrong reasons.

Last year, they came up with a nutty excuse for banning drag queens on their drag cruises because of “9/11 anti-terrorism policies.” Uh huh. And earlier this year, the “fun cruise” was dubbed the “poop cruise,” following problems at sea that left their ship adrift for a week.

If We Have to Tighten Our Belt, Why Doesn’t Carnival Cruises?

In addition to concerns over Carnival’s safety record – and the argument that they should pay for these rescues because but-for their only negligence, there wouldn’t need to be a rescue – there’s also the question of “austerity.”

These aren’t typical times. These are extreme times when Republicans, with the assistance of far too many Democrats, want to question every cent spent (unless it’s a handout to Big Oil, Big Banks, or Big Pharma – that’s all okay). The political class has written countless loopholes into the system that benefit those least in need, while squeezing the middle class and the poor. Handouts to the rich are a national necessity, but any benefits provided to anyone else – like Social Security, Medicare and Medicaid – are “freeloading.”

In the case of Carnival Cruise lines, it’s an American company, though most of its ships are registered in Panama in order to avoid more stringent US laws and US taxes. As we know, Carnival isn’t the only one to pull that trick. Let’s not forget that the current Secretary of the US Treasury, Jack Lew, stashed money in the Cayman Islands, and failed presidential candidate Mitt Romney stashed millions offshore as well. It’s what the 1% do, and everyone in town accepts it.

Oscar Mayer Wienermobile. Photo by Jonathunder via Wikipedia (GNU Free Documentation License)

Oscar Mayer Wienermobile. Photo by Jonathunder via Wikipedia (GNU Free Documentation License)

For me, if those on the right (regardless of party or political office) – including far too many corporate leaders – weren’t so obsessed with hacking into the already-weak US social safety net, Carnival’s mooching would be less of an issue. But we all know that’s not how it works. Blowhards like Paul Ryan brings their vast business experience as the driver of the Wienermobile, and his economic theories learned at the suburbanite-infested upper-middle-class Miami University.

It doesn’t seem right that elderly Americans are being denied urgent cancer treatment, which John wrote about this morning, while corporate America is rolling in money – Carnival made $11 billion in profits from 2007 to 2011, and paid around 1% in taxes – yet those who are in need for life saving treatment are being left out.

Carnival Refusing to Reimburse US Taxpayers

Should Carnival expect to be given handouts like this or are they right to refuse a request to pay millions for rescuing their ship?

Carnival had no issue accepting $236 million from Uncle Sam to provide accommodations for victims of Hurricane Katrina, even though most outside observers found the charges to be exorbitant. Suddenly, Carnival was a proud American company when a quarter of a billion dollars was on the line.

Maybe it’s not even fair to criticize Carnival because everything they did was legal, and it’s not like they’re the only company sucking at the federal teat while avoiding as many taxes as it can.

But when elderly cancer patients are being turned away from their chemotherapy because Republicans claim we just have no choice but to cut the budget, why are we spending a million bucks a shot rescuing a boat that isn’t even American?  Next time Carnival has a problem, I’m sure one of the five ships in the Bahamian Navy will be happy to offer assistance.

An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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45 Responses to “Carnival Cruises pays paltry 0.6% in US taxes – let it rescue its own ships”

  1. The simple answer is this, they either pay full taxes, or they aren’t allowed to dock in the U.S. As for the Coast Guard, they never charge anyone for a rescue, regardless of their nationality. The only time charges are ever incurred is if they have to bring in a third party to tow a ship back to a port, and that money goes to the towing company, not the Coast Guard.

  2. Naja pallida says:

    I was waiting for someone to make this specious argument, took longer than I figured. For starters, it is nearly impossible to live in this country and not pay some kind of taxes, unless your homeless person is off in the forest someplace, living off the land. Most products purchased have a tax associated with them somewhere along the chain of supply, and that is transferred directly to the consumer. You want to eat? You’re going to pay a tax of some sort. Secondly, even if you’re poor, if you live someplace and pay rent, you’re paying taxes. Your rent goes to the landlord, who pays property taxes on any piece of real estate you want to live on. If you work, even part time for minimum wage, you’re paying taxes. If you have a car, you pay quite a few taxes. If you ride public transit, you’re still paying taxes. Income taxes are not the only kind of taxes. Do poor people pay less than someone making a comfortable wage? Certainly, but the reason they pay less is because they have no money. Even the most blind of partisans can understand that one.

    Trying to compare poor people, the vast majority of whom are there by no fault of their own, to a multi-billion dollar company that gets itself into trouble because of its own negligence, corner-cutting, and refusal to maintain its fleet of ships is patently ridiculous on the face of it. There should be absolutely no reason why such a company cannot afford to either maintain its fleet properly, or pay for the services of government coming to bail them out when their incompetence catches up to them. If they’re not going to pay for that up front in their taxes, then they should be billed after the fact.

  3. MRASoldier says:

    Did those people who were stuck in the forest pay the bill to the recuse team since it’s pretty obvious they don’t pay income or property taxes..they should have rescued themselves

  4. MRASoldier says:

    well considering that Carnival hasn’t used the Coast Guard that often
    before..all the taxes they did pay for that didn’t go to any benefit for was time for Coast Guard to deliver the service they were
    paid for

  5. MRASoldier says:

    the homeless and the extreme poor use public resources but pay no taxes, would you be OK with cutting them off?

  6. MRASoldier says:

    Then people who don’t pay any taxes shouldn’t expect ANY assistance

  7. caphillprof says:

    You have a strange understanding. U.S. taxes are owed on U.S. income no matter the nationality of the income earner.

    Also, U.S. taxes are owed on foreign income by U.S. citizens.

  8. Naja pallida says:

    Of course it’s a Republican cop out; they always talk about being responsible while absolutely, steadfastly, refusing to even make a token effort do so. Either we make them deal with their own problems, or we make them pay for it. This bullshit of government coming to the rescue every time a corporation gets into a bit of trouble is costing us billions upon billions, while at the same time those corporations (and corporate whores) are actively lobbying to destroy the same kind of safety nets for those of us who aren’t backed with corporate money.

    Grandma has to eat cat food, and suffer because she can’t afford her medications. Poor children should have their grades tied to whether they should be able to eat. Brown people should have as many barriers to voting as possible. Why can’t corporations be held to the same Republican standards? Get yourself into trouble, get yourself out of it. Government is the problem. No?

  9. Amen. This is the scam that lobbyists pull every day in DC

  10. samizdat says:


  11. samizdat says:

    Well, bonded insurance, with an accompanied contract with a salvage and rescue company would be a nice start. There are plenty of these companies out there, even if coming to the rescue of a poorly managed cruise ship line isn’t currently really part of their business model.

  12. Be careful of the intentions of both sides. Carnival is a billions of dollars per year industry ($15.4B in 2012). That’s $92M in taxes last year alone. See how politicians can make 0.6% seem like a small number?

  13. condew says:

    When I hiked in the Grand Canyon, I seem to remember being assured that if I could not get myself out of the canyon, they would rescue me, but it would cost me. I don’t think rescue in national parks is free.

  14. condew says:

    So a company that has a terrible record for safety and maintainance on their profit-making ships is going to keep a fleet of rescue ships in top condition and ready to mount a rescue at a moment’s notice? That sounds a lot like the Republican cop out of “let business police themselves.”

  15. condew says:

    Or just rescue the ship, then impound it until the costs are paid.

  16. condew says:

    Sounds like there should be major fines for operating a ship in an unsafe manner leading to a need for rescue efforts, perhaps tax-deductable for U.S. flagged ships when they pay their federal U.S. taxes.

    If a company with foreign-flagged ships contributes to the campaign of a U.S. elected official, is that an illegal contribution by a foreign entity?

  17. condew says:

    If I understand you, then a company owned by a Chinese businessman doing business in the U.S. would pay no taxes, even if that businessman spent 90% of his time in the U.S. and operations in the U.S. were the bulk of his business? Sounds like a major giveaway.

  18. Ninong says:

    During the Costa Concordia disaster, most of the instructions to the crew were in Italian even though just about none of the cooks, stewarts and others understand Italian. The Filipinos and the Indians communicate with each other in English and the Colombians can manage a little English when communicating with the Filipinos and Indians.

    Most of the low-paid workers on that ship were Filipino, then Indian, then a few Colombians. They don’t speak Italian. No one was ‘in charge.’ The captain abandoned ship himself early in the process and went home!

    ‘I regret nothing:’ Costa Concordia captain says he understands why people ‘hate’ him but other officers should share the blame. What an idiot!!!

    Read more:

  19. Ninong says:

    They need to change the flag laws. Right now the only ships that flag in the US are the ones that operate local tours within the state of Hawaii. That’s because they don’t stop at any international ports. We should make it based on where most of the ship’s passengers board!

    All the shipping companies flag in the countries with the lowest taxes and the lowest safety requirements. If their passengers board in Miami or Ft. Lauderdale, then should should have to flag in the U.S.

  20. caphillprof says:

    We now have computers that can almost instantaneously effect mass sales or buys of securities. Those same computers can effectively assign a corporations net annual income to the shareholders, who then should include that income in their own personal taxation. We should make all corporations, trusts and other schemes against the public interest pass throughs for income tax purposes

  21. lynchie says:

    If you use any services provided by our federal, state or local taxes they must pay taxes. They must pay for rescue but then we don’t expect oil companies to pay to clean up, or pollution, etc., etc. I agree if you don’t like the taxes leave. Someone will come along to fill the void.

  22. lynchie says:

    So am I and I am not paying for people to put themselves and more importantly the rescuers at risk so they can climb a mountain or get lost in a forest with no means to survive. Just as I don’t believe in bailing out banks who of their own accord decided to play with our money and take risks, lose it, expect a bailout and then reward the same assholes who were gambling with our money. So I surmise that you are ok with cutting health care, SS and benefits for the poor and elderly so someone can go off in the bush get lost and expect people to volunteer along with the paid personnel put themselves at risk and expect that my money be used to save their ass.

  23. Hue-Man says:

    This is a huge and expensive local issue when skiers, snowboarders, snowshoers, and hikers go out of bounds and need rescue from avalanches, hypothermia, and the other risks of back-country Canada. A good summary from January:

    “Still, rescue organizations oppose the idea of billing or fining those who require their services. Don Bindon, president of the B.C. Search and Rescue Association, worries that fear of a hefty fine would discourage people from calling for help. Worse still, he says, is the prospect of family members or
    friends trying to rescue loved ones in order to avoid a punishing bill:“Then we’ve got a whole pile of amateurs up on a hill. We want people to phone us. We don’t want them to wait, and we don’t want their friends to go get them.””

    IMHO, this is NOT Carnival – according to Wiki, it would be 159th on the Forbes 500 if it were an American company. It is a typical profit-sucking mega-corporation – pay no tax, minimize wages, minimize repairs and maintenance, maximize revenue, and offload expenses to anyone – including dying grannies – who will pay. Rescuers should pre-bill and collect in advance $100 million before the rescue begins and once passengers are safe.

  24. There’s a simple solution to the huge problem of corporations that don’t pay taxes where they do business: We have to legally require them to pay taxes where they do business. I know it’s naive to expect lawmakers — who are in the pockets of all these businesses, thereby directly benefitting from the corps’ outrageously high untaxed profits — to enact such a law. But I can’t believe that no one seems to be discussing this as even a pie-in-the-sky dream. Not even progressive sites like this one.

    Carnival doesn’t want to pay the already ridiculously low corporate rates on the money it earns from U.S. passengers who embark and disembark from U.S. ports? Starbucks doesn’t want to pay the already ridiculously low corporate rates on the money it earns from U.K. coffee drinkers? Great. They can take their business elsewhere and make room for local companies who *will* be responsible corporate citizens.

  25. PDQ says:

    So are you saying that the hiker is a 1% type who doesn’t pay taxes because all their assets are stashed offshore? Then yeah, they should pay. But if I’m paying taxes, then that’s a different story.

  26. Ninong says:

    Hey, you would make a good defense lawyer for Carnival over in Italy, where the Italian government is having to sue them to recover the cost of rescue involved in the grounding of Carnival’s Costa Concordia. And that accident, which killed nearly three dozen passengers, was caused by showboating on the part of the captain.

    The truth is that this is an irresponsible corporation and they expect the taxpayers of the world to pay for their irresponsible behavior. Reminds me of BP, another corporation with a horrible safety record.

  27. Ted says:

    You really can’t pick and choose here. If you want Carnival to pay for a rescue, then someone who goes hiking and gets rescued should then pay as well. Do we really want to be a society that “charges” someone simply because they got into a situation where they needed to be rescued?? To me it seems more logical to force Carnival (and others) to operate their own rescue vehicles, just like air ports have their own rescue vehicles/equipment. Coast Guard could be used as a back-up.

  28. mike31c says:

    Repukes/t-baggers have this big love for corporate socialism :p

  29. karmanot says:

    There could be a minimal poor taste tax.

  30. karmanot says:

    How about a clown-mall tax for Carnival Cruises that falls on the passengers.

  31. AdmNaismith says:

    Flagging in foreign countries is SOP for nearly all shipping companies. Countries with a low safety bar and even lower taxes (or is that a low tax bar and even lower safety regs?).

  32. Zorba says:

    Sounds reasonable to me, Naja. But what are the chances of this happening? :-(

  33. perljammer says:

    Right. Sorry, I forgot to set the sarcasm flag.

  34. BeccaM says:

    If they’re on a Carnival Cruise, they’re probably poor newly-weds and retired oldsters. The 1%’ers have their own yachts.

  35. Naja pallida says:

    Don’t forget, the ports are also largely publicly constructed and operated. When a cruise ship company wants to build a new gigantic class of ship, they basically tell countries “Make your ports accommodate us, or we’ll go someplace else.” Nobody wants to risk losing the amount of tourist dollars that a ship with >5000 sweaty Americans bring to an area on a weekly basis.

  36. perljammer says:

    So, how much money would be saved if the Coast Guard just rescued the passengers (they pay taxes, even if the cruise line does not), and let the cruise ship fend for itself? Maybe that would make you feel better? But wait, then you have a large ship adrift in shipping lanes; better be ready to rescue a nice long string of passengers and crews as this giant seagoing pinball caroms from collision to collision. And then there’s the damage to life and property when it finally fetches up ashore in some populated area.

    Or maybe we don’t need to rescue the passengers; after all, most of them are probably 1%-ers who don’t pay their fair share of taxes, either.

    Then there’s those rescue costs. When the Coast Guard says a rescue operation costs $1.5 million, does that mean they spent an extra $1.5 million because of the operation, or are they just allocating their normal operating costs to the rescue for the duration of the operation?

    Additionally, there’s the small matter of maritime laws with respect to rendering aid to ships in distress, as mentioned by Naja. So, this is a nice, self-righteous rant with very little relevance in the real world.

  37. Naja pallida says:

    Any large corporate owned ship-operating company should be required to maintain a fleet of rescue craft capable of towing/salvaging their own ships. Cruise ship companies especially, should be required to maintain a rescue craft that can evacuate people off of a stranded ship, so people don’t have to live in a giant porta-potty for days on end while they get their asses in gear. If they use any public resources, they should be billed at the going private rate for such services.

  38. Naja pallida says:

    It is pretty standard practice for cruises ship companies to avoid not only US taxes, but also labor laws, and even our requirements for ship maintenance and safety. If they fly the flag of Panama, or the Bahamas, they have to follow their rules, not ours. Maritime law essentially allows for them to pick the country with the most lenient rules, and lowest rate of taxation. Oil companies do the same thing for their oil rigs. Deepwater Horizon was flagged for the Marshall Islands – a place that the rig most likely had never ever ported at. Maritime law also requires that any ship in distress must be aided by the nearest available ships. If that is ~200 miles off our coast, it is generally going to result in our coast guard responding.

  39. BeccaM says:

    I’ve little doubt they’re also using the Panamanian registrations to avoid the health and safety violation fines for their crappy, unmaintained cash-cow ships.

    The vast majority of Carvnival’s paying passengers are Americans, right? And they originate out of American ports, most of which are taxpayer supported in some way. And for the privilege of sucking immense amounts of money out of America, they’re paying a little over half a percent on profits of billions.

    Many would consider that theft. As Zorba points out below, they’re clearly happy to keep all their profits, but the losses end up being paid by us — the taxpayer hosts to their parasitic business practices.

  40. BeccaM says:

    Amen, Zorba.

  41. lynchie says:

    But like other U.S. companies they are part of the ownership of Congress. But we do this for the average citizen as well. How about climbers stuck up a mountain and helicopter crews and rescue climbers are put at risk. I have often felt that if you put yourself at risk you pay the cost of the rescue. There is no control on the cruise ships, foreign registered, billions made and thousands of passengers prepared to live in shit for a chance to cruise around on a floating septic tank. American exceptionalism at its best.

  42. Zorba says:

    Love it! But unfortunately, it ain’t gonna happen. I just wish it would.

  43. UncleBucky says:

    FIRST, let Carnival and all the corporate blood suckers pay taxes. Then, let them warn passengers that if the boat has a problem, the US Coast Guard or other naval assist vehicles will NOT be helping unless each passenger forks over $150 bucks for the rescue and transfer to a passable hotel. Each to his own. Self-responsibility. Pay for your own rescue, don’t depend on the gummint.

    OK. So, then, once Carnival is reduced to being on its own recognisance, then we can decide as a Nation to help them or not. That’s the way the GOPers, Teababbluers and Libertarian Cloud Cuckoo people are about the poor, sick, elderly and indigent. Why not with the filthy rich and corporate persons? They gots the jack, baby! Hahaha

    Once they realize at corporate HQ that, like help from the Californian, help is NOT on the way, I think they will be wanting to pay their taxes.

  44. Zorba says:

    Carnival wants to avoid US taxes? Fine, then Carnival should be paying us for all the rescues.
    I’m getting more than tired of corporations who want to privatize their profits, but socialize their losses.

  45. nicho says:

    Add to that the fact that cruise ship employees are pretty close to slave labor. Many people who get all sniffy about Chinese sweatshops have no trouble climbing aboard one of these floating malls to enjoy the services of people who are seriously overworked and underpaid.

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