FOR IMMEDIATE RELEASE
January 20, 2015
FACT Praises Introduction of Stop Corporate Inversions Act
Renewed Focus on Corporate Tax Avoidance
Washington, DC – The FACT (Financial Accountability and Corporate Transparency) Coalition is praising the introduction today of the Stop Corporate Inversions Act by Senator Richard Durbin (D-IL) and Representative Sander Levin (D-MI).
The bill, along with last week’s Stop Tax Haven Abuse Act introduced by Senator Sheldon Whitehouse (D-RI) and Representative Lloyd Doggett (D-TX), shows a concerted effort by some in Congress to combat corporate tax avoidance.
The Stop Corporate Inversions Act would end the current practice of treating inverted corporations as foreign companies even when they have not left the United States in any real sense.
An inversions is a process by which U.S.-based multinational companies claim to be a foreign corporation on paper in order to avoid paying U.S. taxes. A loophole in the tax laws allows this to happen when an American corporation merges with a foreign corporation. In theory, profits earned by the newly merged company in the U.S. would still be subject to U.S. taxes, but corporate inversions are usually followed by additional tax avoidance practices to make U.S. profits appear to be earned abroad and thus not subject to U.S. taxes.
Last year, the news was filled with U.S. companies announcing plans to invert, or completing an inversion: Pharmaceutical companies AbbVie and Shire, Allergan and Valeant, Walgreen’s “moving” to Switzerland (which was ultimately halted because of intense public pressure), and even the failed merger of Pfizer and AstaZeneca.
“The companies pursuing corporate inversions are among the worst of the tax dodgers,” said Rebecca Wilkins, FACT Executive Director. “They have shifted billions of dollars in profits from the U.S. and other countries where they actually do business into offshore tax havens where they only have a mailbox. It’s especially offensive for these companies to be moving the profits that were made possible by tax incentives like the research and development credit, by physical and scientific infrastructure, by the U.S. patent office and the U.S. court system where they defend those patents. American taxpayers paid for these important things and now these companies are turning their backs on the country that made their success possible. It’s time for Congress to end this abuse.”
“Large multinational corporations have sought out newer trickier ways to get around paying their taxes on U.S. profits, hiring thousands of tax accountants to do so,” said Jaimie Woo, Tax and Budget Advocate for U.S. PIRG. “Corporate inversion is only one method, and implementing this bill is a critical step towards closing the many tax loopholes that force Americans to pick up the tab through higher taxes, more debt, and cuts to public programs.”
“We have to act quickly and decisively to stem the wave of inversions,” said Nathan Proctor, National Campaign Director with Fair Share. “We can’t let big corporations continue to dodge taxes just because they can afford high-paid tax lawyers who run these complicated schemes — everyone should play by the same rules.”
“When corporations avoid taxes, they avoid contributing to their communities,” noted Eric LeCompte, Executive Director of the religious development organization, Jubilee USA Network.
“Congressional champions like Senators Durbin and Reed and Representatives Levin and Doggett are leading the way to addressing the gaping holes in international tax code that allow profitable multinational corporations to reincorporate overseas as a way to reduce their tax rates,” Susan Harley, deputy director of Public Citizen’s Congress Watch division. “Public Citizen calls on President Obama, as well as all members of Congress, to join with these champs to step up to the task of ensuring that corporations pay their fair share of the cost of government,”
“Corporate inversions result in the loss of billions of dollars in federal revenue that if invested in public infrastructure and education would enable businesses to innovate, conduct efficient operations, and attract better-skilled talent,” said Bryan McGannon, Policy Director of the American Sustainable Business Council. “In addition, inversions allow many corporations to pay lower tax rates than their small business counterparts, unfairly shifting the tax burden to weigh more heavily on others. ASBC supports the Stop Corporate Inversions Act and its reduction of the inversions tax loophole.”
“Stopping inversions is one step to eliminating the rigged rules that privilege huge multinational corps over ordinary citizens. When big corporations dodge taxes, taxpaying Americans are the ones to foot the bill. Congress must urgently pass legislation to close tax loopholes and make corporations pay their fair share,” said Gawain Kripke, Director of Policy and Research for Oxfam America.
Founded in 2011, the Financial Accountability and Corporate Transparency (FACT) Coalition unites civil society representatives from small business, labor, government watchdog, faith-based, human rights, anti-corruption, public-interest, and international development organizations. We seek an honest and fair corporate tax code, greater transparency in corporate ownership and operations, and commonsense policies to combat the facilitation of money laundering and other criminal activity by the legitimate financial system.