Close Tax Loopholes

There is widespread agreement, across the political spectrum, that the gaming of the tax code by multinational corporations is a problem. When profits and jobs are shipped offshore, we not only harm the U.S. economy, we fuel a tax haven industry that drains wealth around the world. We seek to fix the problem of large, well-connected interests gaming the tax system.

The Paradise Papers: A Year Later

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.

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‘Financial Exposure’ Showcases Tax Misconduct by Powerful Individuals and Corporations

The story of tireless congressional staff uncovering brazen misdeeds by powerful individuals and corporations in Elise J. Bean’s Financial Exposure has an anchoring quality in the context of rampant scandal that has come to characterize today’s politics. Bean’s account reiterates the point that tax avoidance and tax evasion were endemic to our financial system long before allegations against a sitting president brought them to the forefront of the public consciousness.

While the Permanent Subcommittee on Investigations (PSI) is an investigative body rather than a policymaking one, the inquiries into abusive tax shelters, secretive banking practices, and corporate tax avoidance that Bean describes illustrate some of the central policy problems plaguing the American tax system.

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Revealing Big Pharma’s tax dodging: The story behind the numbers

Critics may argue the data we base our calculations on is incomplete, the methodology with which we calculate tax loss figures simplistic. And they are right.

Our tax loss estimates are rough because corporate secrecy limited our access to data. We analyzed information for only a small subset of the dozens of countries in which pharma corporations operate, and only a subset of their subsidiaries in those countries. The data we found is just the tip of the iceberg, especially for developing countries.

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New Study Confirms Offshore Earnings are Flowing into Stock Buybacks, Not Jobs and Investments

For years, corporations stockpiled profits offshore to avoid paying U.S. taxes, with the sum growing to $2.6 trillion by 2017. Corporate apologists suggested that this cache was necessary because the corporate tax rate was too high, and they asserted that if the United States lowered its tax rate, corporations would repatriate those profits, pay taxes, invest in workers and we’d all win.

In 2016, then candidate Trump claimed there is as much as $5 trillion overseas and a tax break on those earnings would cause “all of this money to come back into our country” and “turn America into a magnet for new jobs.”

Based on previous experience with a repatriation holiday in 2004, critics argued that another repatriation tax break would be a major windfall to corporations that would enrich shareholders and accomplish little else.

In the end, corporations and their allies got their way.

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