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 new tax law, the Tax Cuts and Jobs Act (TCJA), changed the tax system from one in which U.S. corporations paid taxes equally on all their profits to one in which they pay lower taxes on profits booked outside the United States. By lowering the tax rate on foreign profits, the tax code now encourages U.S. corporations to move U.S. jobs and profits offshore.
Giegold is a member of a parliamentary delegation which has just concluded a fact finding trip to Washington on what the US is doing to combat financial crime.
The delegation from the economic and monetary affairs committee was in Washington and New York to meet representatives from the US Treasury, the Institute of International Bankers (IIB) and the Federal Reserve Board (FRB).
After 2 years of bipartisan negotiations, without warning or fanfare, the leadership of the U.S. House Financial Services Committee stripped beneficial ownership provisions out of a bipartisan anti-money laundering bill and planned a Committee vote.
A decision was made to drop beneficial ownership because it was thought to be controversial and a stripped down bill would “pass easily.” However, as FACT’s executive director describes in this op-ed in the American Banker, that was simply not the case.
The Tax Cuts and Jobs Act (TCJA) radically changed the international tax system. It slashed taxes on corporate income, both domestic and foreign. It encouraged U.S. multinational corporations to shift jobs, profits, and tangible property abroad, and keep intangibles home. This report describes the new international tax system—and its many gaps—and also provides a road map for how to fix these gaps and surveys recent legislative approaches.
Rep. Peter DeFazio introduced legislation to discourage multinational corporations from moving abroad by taxing corporate profits on a per-country basis
On February 1, the B Team published “A New Bar for Responsible Tax: The B Team Responsible Tax Principles,” with the endorsement of nine corporations (Allianz, BHP, Maersk, Natura, Repsol, Safaricom, Shell, Unilever and Vodafone). I was privileged to serve as a member of the Company Working Group that oversaw the development of the Principles over the course of 2017, representing an investor perspective.
After several years of engagement with a variety of corporations on these issues on behalf of Domini Impact Investments, I am optimistic that the B Team’s work establishes a promising platform for meaningful dialogue with corporations about their tax practices. The Principles are not perfect, but I believe they represent an important step forward.
I was therefore very disappointed to see TJN’s critique of the Principles, The B-Team: Lowering the bar for tax transparency? I reached out to Alex Cobham, Chief Executive of Tax Justice Network, and both of us felt that our exchange would be worth sharing, as other organizations evaluate the B Team principles for themselves.
