I love a good cruise story – even those gone bad. Gilligan’s Island? I’d totally live with those seven strangers (did anyone else find the Professor dreamy?). And the Titanic? Even when dying, Leonardo DiCaprio managed to make Kate Winslet swoon. Being shipwrecked or smacking into an iceberg at least makes a good romantic story.
But even I draw the line at pooping in a Ziploc. Not an ounce of romance there. Eating cold onion sandwiches? Sleeping in makeshift tents? The alleged horrors aboard the Carnival Cruise Ship, Triumph, have certainly dampened my excitement about a future cruise. This week.
Fortunately, I have a fairly short memory – like most of America – when it comes to the news, so chances are that I’ll forget all about it come next week. That’s what Carnival is banking on. Likewise, they’re hoping that most Americans who are saying things like “If I cruise, I’ll never go on a Carnival ship” won’t figure out that’s like boycotting Philip Morris: nearly impossible. Their holdings are too vast. Carnival Corporation is the largest cruise ship operator in the world. In addition to Carnival Cruise lines, the company owns nearly 50% of the world cruise market, including AIDA Cruises; Costa; Cunard; Holland America; Ibero; P&O; Princess; and Seabourn. Or as my husband pointed out, nearly everything but Royal Caribbean.
As you can imagine, Carnival makes a lot of money. And despite this latest, um, glitch in their public relations, they will continue to make a lot of money. And they have you to thank.
No, it’s not just your patronage that they appreciate. It’s your tax subsidies. You see, Carnival does pretty well for itself in the U.S. And they pay about a 1% tax rate. Even Warren Buffett doesn’t do that well.
While the U.S. Coast Guard patrols the seas for Carnival’s ships – and, in the case of the Triumph, towed them back to safety – Carnival ducks out on most U.S. taxes.
Carnival (the Cruise Lines, not the Corporation) is headquartered in Doral, Florida. It is, however, legally incorporated elsewhere, in Panama. That allows the company, under the current Tax Code, to legally avoid paying most U.S. taxes.
Just last year, this raised the ire of Sen. Jay Rockefeller (D-WV) who grilled the industry on why they pay such little taxes while benefiting from the use of resources of roughly forty federal agencies. There were no answers.
This isn’t news in the cruise world. Attorney Jim Walker of Cruise Law News has been reporting on this issue for some time now, querying whether Carnival pays its fair share of taxes. Walker specifically took aim at Carnival CEO Micky Arison in 2011 and again in 2012 after Arison reportedly found Sen. Rockefeller’s tax questions “insulting.” Arison’s done pretty well for himself, despite the criticisms, landing at #68 on the Forbes 400 last year. He is reportedly worth $5 billion.
The New York Times likewise took a shot at Carnival in 2011 with a jab from David Leonhardt. Leonhardt’s take away? Carnival is just doing what most corporations in America are doing: chasing tax loopholes. And if we don’t like it? Well, those companies will just take their big tax breaks and leave. At least that’s what Arison told protestors who questioned his tax strategies. Arison reportedly suggested that he would take the cruise line to China if he were forced to pay higher taxes.
Arison likes to remind us that Carnival is a global company. This is true. But an overwhelming share of their customers come from the U.S. And for years, with the assistance of federal agencies and local governments, Carnival has floated – er, was towed? – along on the U.S. taxpayer’s dime.
Maybe it’s not only the Triumph that stinks.
