Blog

Rep. Doggett and Sen. Whitehouse Reintroduce Bill to End Offshore Tax Avoidance

By Lorena Roque

Last Thursday, Representative Lloyd Doggett and Senator Sheldon Whitehouse announced that they are reintroducing the “No Tax Breaks for Outsourcing Act.” Our international corporate tax rules have been a mess for a long time, and the Tax Cuts and Jobs Act (TCJA) failed to resolve the problems. The old rules and the new rules under TCJA both tax offshore corporate profits more lightly than domestic corporate profits, but in different ways. The No Tax Breaks for Outsourcing Act would create rules that tax domestic profits and foreign profits in the same way.

The old rules allowed American corporations to defer paying taxes on their offshore profits until those profits were officially brought to the U.S., which in many cases was never going to happen. The new rules, under TCJA, are also problematic because they exempt certain offshore profits and tax other offshore profits at just half the rate imposed on domestic profits.

Read More...

Will They Listen to What They Hear?

By Gary Kalman

This Wednesday, March 13th, the House Financial Services Committee’s subcommittee that covers national security issues will hold a hearing on corporate transparency and efforts to fight money laundering.  They will once again discuss a proposal to collect the ownership information (a.k.a. beneficial ownership) of companies when they are formed in the United States.  Currently, no state collects this information, and the anonymity has opened the door to a vast array of bad actors that endanger our communities and threaten our national security.  More on that later.

The Committee is to be applauded for raising these important issues.  Let’s only hope that, this time, they listen to what they hear.

Read More...

Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Taxes

By Matthew Gardner

The popular video streaming service Netflix posted its largest-ever U.S. profit in 2018­­—$845 million—on which it didn’t pay a dime in federal or state income taxes. In fact, the company reported a $22 million federal tax rebate.

After a year of speculation and spin, the public is getting its first hard look at how corporate tax law changes under the Tax Cuts and Jobs Act affected the tax-paying habits of corporations. The law sharply reduced the federal corporate rate, expanded some tax breaks and curtailed others. The new tax law took effect at the beginning of 2018, which means that companies are just now closing the books on their first full year under the new rules.

Read More...

On Anniversary of Tax Law, Celebrations Are in Board Rooms — Not Living Rooms

By Gary Kalman

Supporters of the Tax Cuts and Jobs Act might have hoped for a more celebratory first year anniversary.  The public has not seen the kinds of benefits promised — few have seen anything close to $4000 raises, and real wage growth, accounting for inflation, continues to be sluggish.  And despite surging corporate profits, the stock market took a tumble as other factors weigh heavy on the minds of investors. Even the board room celebrations are muted at best.

Read More...

Tax Transparency Fights Tax Avoidance

By Gary Kalman

Justice Brandeis once famously said that “sunlight is the best disinfectant.”  It is a quote advocates for government and corporate transparency have repeated each time we are asked if any of “this stuff” makes a difference.  For the record, it does.

The latest evidence comes from a recent report produced by two German academics looking at whether a European Union (EU) tax transparency initiative had any measurable impact on corporate behavior.

Read More...

The Paradise Papers: A Year Later

By Jacob Wills

This week marks the one-year anniversary of the release of The Paradise Papers, a leak that included 13 million documents from a large offshore law firm.  The leak detailed a number of tax avoidance techniques used by the wealthy and multinational corporations to avoid taxes.  At the same time, Congress was rushing to pass the Tax Cuts and Jobs Act.

In light of the Paradise Papers revelations, we encouraged lawmakers to carefully review the information from the leak and consider whether their overhaul would address the tax dodging practices exposed.  They chose not to do so.

Unlike the earlier Panama Papers story, where Americans were notably absent, the Paradise Papers had clear U.S. connections.  There was extensive data on the tax avoidance schemes of at least 31,000 U.S. citizens, residents, and companies including household names like Apple, Nike, and Uber.  Rather than consider lessons to be learned around how policies might work in practice, lawmakers chose to ignore the warning signs.  The tax law passed just over a month later with minimal attention paid to any of the insights to be gleaned from the leak.  It should not be surprising that the law continues to encourage multinational corporations to engage in offshore tax schemes.

Read More...

Shell Companies Allow Robocallers to Make Billions of Illegal Phone Calls

By Adam Felsenthal

Back in June, the Federal Trade Commission (FTC) formally filed a complaint alleging that TelWeb, a telemarketing system, used multiple shell companies to bypass laws against telemarketing robocalls. TelWeb has been the target of other lawsuits by the FTC.  The investigation alleges that the system was used to conduct billions of illegal phone calls by telemarketers through an enterprise of shell companies.

The fact that this same system has been the target of so many separate investigations is evidence of a larger problem — companies can be formed in the United States without disclosing their beneficial ownership information (the people who truly own them), allowing criminals to quickly rebrand and jump right back into doing the same illegal activities under a fresh new corporate name. TelWeb was able to use multiple shell companies throughout its scamming system, and the men in charge of connecting TelWeb to telemarketers have a history of being named in previous FTC lawsuits.  Yet they were able to continue in the industry under different names.

Read More...