Updated: MAY 17, 2021
RE: Disclosure of Tax Havens and Offshoring Act (H.R. 3007 / S. 1545)
Dear Chairwoman Waters and Ranking Member McHenry / Chairman Brown and Ranking Member Toomey,
We, the undersigned organizations, strongly urge you to advance the Disclosure of Tax Havens and Offshoring Act (H.R. 3007 / S. 1545). This crucial legislation would require large, publicly-traded corporations to disclose high-level financial information (i.e., profits, revenues, taxes, number of employees, and assets) on a country-by-country basis to better inform taxpayers, investors, policymakers, academics, and other stakeholders. This disclosure would shine a spotlight on tax avoidance strategies and contribute to the fair and transparent tax system the U.S. needs to emerge from the COVID-19 pandemic on a sustainable and equitable path.
The ongoing COVID-19 pandemic has laid bare the ramifications of the global race to the bottom on taxes, which has drained government coffers, hollowed out our public health and social services, and given rise to levels of economic inequality not seen since the Gilded Age. Certain companies profiting the most during the pandemic – like Microsoft, Google, or Facebook, which saw their profits surge since the start of the crisis – have a history of avoiding federal income tax. They are not outliers. “Building back better” requires more than a health care response to the pandemic: it requires reimagining a fairer tax system that works for all.
Even before this crisis, copious studies found that large, multinational corporations in the United States and elsewhere use provisions in the tax code to shift profits and avoid paying taxes that they would otherwise be required to pay. The Organization for Economic Cooperation and Development (OECD) estimates the annual losses globally from tax avoidance to be in the hundreds of billions of dollars – with the U.S. experiencing some of the biggest losses in revenue. Analysis from the Institute on Taxation and Economic Policy revealed that 91 profitable Fortune 500 companies paid no U.S. federal income taxes in 2018, while another 56 such companies paid between 0 and 5 percent. The U.S. Treasury Department estimates revenue losses from multinational tax avoidance to be at least $60 billion a year. Aggregate data from the U.S. Internal Revenue Service pulled from the initial reports filed by corporations under the OECD’s current country-by-country reporting framework show that, in 2017, more profits were booked in known tax haven countries (including the Cayman Islands, Bermuda, and Singapore) by U.S. multinationals than in China, Canada, and Mexico — the three largest U.S. trading partners.
This tax haven abuse makes it much harder for federal and state agencies to help their constituents overcome the COVID-19 pandemic. Such enormous revenue drain increases the pressure on lawmakers to heed the call to cut public services that are vital to a functioning economy and the COVID-19 response or unfairly shift the tax burden to other taxpayers, such as those who are less able to pay (including those suffering most from the pandemic). Either option leads to regressive fiscal regimes which exacerbate economic inequality and undermine the COVID-19 recovery effort.
The Disclosure of Tax Havens and Offshoring Act is an important step in reversing the wealth drain from multinational tax avoidance. The legislationwould require multinational companies to publish the country-by-country reports that they must already provide to the Internal Revenue Service (IRS) under an OECD agreement. The legislation entails no additional cost or burden on reporting companies.
Increasing tax transparency through public disclosure will induce large corporations to clean up the most questionable tax practices — boosting revenues to combat the economic and health ramifications of the virus, invest in infrastructure, and other priorities. We have already seen this in the European Union, which required large banks operating in member states to publicly report certain profit and tax information on a country-by-country level. After accounting for all other factors, transparency alone pushed these financial institutions to move away from their most aggressive tax avoidance schemes — resulting in a rise in their effective tax rates, according to an academic review.
Publishing country-by-country reports will inform the public debate and help lawmakers to close the legal loopholes that multinational corporations exploit to avoid tax. The new Administration has stated its plans to take on multinational corporate tax avoidance: public country-by-country reporting would provide further data to assess the future impact of those plans, and help evaluate whether further anti-tax avoidance reform measures are necessary.
It will help investors gauge the value of companies. Projecting tax liabilities is crucial to price a company as taxes represent about a quarter of after-tax profits. Yet taxes are a black-box to investors, who can’t assess which companies are vulnerable to changes in tax law or tax enforcement in the United State or abroad.
Publicly available country-by-country reports will also advance knowledge in other areas of public policy than tax as well as in economics, business management and other academic disciplines.
We thank you for taking our views into account. If you have questions, please feel free to contact Robert Stewart at [email protected]
Africa Faith & Justice Network
American Family Voices
American Federation of Government Employees (AFGE)
American Federation of Teachers (AFT)
Americans for Democratic Action (ADA)
Americans for Financial Reform
Americans for Tax Fairness
Association of Concerned Africa Scholars USA
Campaign for America’s Future
Center for International Environmental Law (CIEL)
Center for International Policy
Center for Popular Democracy
Citizens for Responsibility and Ethics in Washington (CREW)
Communication Workers of America (CWA)
Congregation of Our Lady of the Good Shepherd, U.S. Provinces
Corporate Accountability Lab
DC Dorothy Day Catholic Worker
Economic Policy Institute
Environmental Investigation Agency
Financial Accountability and Corporate Transparency (FACT) Coalition
Faith Action Network of Washington State
For the Long Term
Friends of the Earth U.S.
Fund for Constitutional Government
Global Alliance for Tax Justice
Global Financial Integrity
Government Accountability Project
Gray Nuns of the Sacred Heart
Healthcare for America Now (HCAN)
Institute for Policy Studies – Program on Inequality and the Common Good
Institute on Taxation and Economic Policy (ITEP)
Interfaith Center on Corporate Responsibility
International Brotherhood of Teamsters
International Federation of Professional & Technical Engineers (IFPTE), AFL-CIO
International Rights Advocates
Jobs with Justice
Maryknoll Office for Global Concerns
National Advocacy Center of the Sisters of the Good Shepherd
National Education Association
National Employment Law Project
National Organization of Women
NETWORK Lobby for Catholic Social Justice
Never Again Coalition
New Rules for Global Finance
Open Contracting Partnership
Peace Education Center
Progressive Change Institute
Project Expedite Justice
Project on Organizing, Development, Education, and Research (PODER)
Publish What You Pay – US
Revolving Door Project
Rights and Accountability in Development (RAID)
Service Employees International Union (SEIU)
Seventh Generation Interfaith Coalition for Responsible Investment
Sisters of Charity of Saint Elizabeth
Sisters of St. Francis of Philadelphia
Strong Economy for All Coalition
Take on Wall Street
Tax Justice Network
Tax Justice Network Africa
Tax Justice Network USA
The International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW)
The Shareholder Commons
Union Veterans Council, AFL-CIO
United Church of Christ, Justice and Witness Ministries
US-Africa Bridge Building Project
Voices for Progress
Working Partnerships USA
 Oxfam, “Power, Profits and the Pandemic: From corporate extraction for the few to an economy that works for all,” Oxfam, September 2020, https://www.oxfamamerica.org/explore/research-publications/power-profits-and-pandemic-corporate-extraction-few-economy-works-all.
 Alex Cobham, “Estimating tax avoidance: New findings, new questions,” Tax Justice Network, March 22, 2017, https://www.taxjustice.net/2017/03/22/estimating-tax-avoidance-questions/.
 Matthew Gardner, Lorena Roque, Steve Wamhoff, “Corporate Tax Avoidance in the First Year of the Trump Tax Law”, Institute on Taxation and Economic Policy, December 16, 2019; https://itep.org/corporate-tax-avoidance-in-the-first-year-of-the-trump-tax-law/.
 U.S. Treasury, “The Made In America Tax Plan,” April 2021, p. 11, https://home.treasury.gov/system/files/136/MadeInAmericaTaxPlan_Report.pdf
 Overesch, Michael and Wolff, Hubertus, Financial Transparency to the Rescue: Effects of Country-by-Country Reporting in the EU Banking Sector on Tax Avoidance (February 8, 2019). Available at SSRN: https://ssrn.com/abstract=3075784 or http://dx.doi.org/10.2139/ssrn.3075784.