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CEOs, Multinationals, and Small Businesses to Congress: End Anonymous Companies

By Clark Gascoigne

Business Support Continues to Grow for Corporate Ownership Transparency

A group of CEOs from major companies, a trade association of major multinational enterprises, and a small business trade group each called on Congress over the past week to end the abuse of anonymous shell companies, adding to the momentum to enact corporate ownership transparency legislation.

CEOs

A dozen current and former CEOs from major corporations (including Allianz, Chobani, Danone, Kering, and Unilever) sent a letter to Congress on Tuesday calling on lawmakers to end anonymous shell companies by enacting the bipartisan Corporate Transparency Act of 2019.

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Tax Day Highlights Broken Promises and a Need for Transparency

By Gary Kalman

On Tax Day 2019, the first year of data on corporate taxes under the Tax Cuts and Jobs Act (TCJA) are coming in.  Those who championed the corporate reforms promised, among other benefits, that the changes would end the offshore shell games by multinationals, profits stashed in tax havens would return to the U.S., and the new competitive rate would attract a flood of foreign direct investment.

Opponents of the new law, like the FACT Coalition and our members, argued that the incentives would have the opposite effect: the offshoring of profits would continue and the incentives might well create new (unhelpful) distortions influencing corporate behavior.

It is now time to look at what actually happened.  To get a better sense of the impact, consider the following recent excerpts from various news reports and analysis by tax experts.

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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.

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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.

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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.

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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.

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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.

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