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.
Administration and Congressional Leaders Unveil Plan to Allow Multinationals to Pay Little-to-No Taxes on Profits Booked Offshore at Expense of U.S. Businesses and U.S. Taxpayers
WASHINGTON, D.C. — The White House and congressional leaders unveiled a joint tax plan today that would allow multinational corporations to pay little-to-no taxes on the profits they book offshore.
A 2004 Offshore Tax Holiday Left 600,000 Jobless. A Decade Later, Congress Is at Risk of Making the Same Mistake
In 2004, the grass seemed greener on the other side — overseas where multinational corporations kept stashing profits. A corporate tax policy (known as “deferral”) allows U.S. corporations to defer taxes on their profits booked offshore until they are returned to the U.S. By 2004, deferral had led to a cash hoard of $527 billion, equivalent to 4.3 percent of GDP, amassing offshore.
Back then, President Bush signed the American Jobs Creation Act of 2004 (AJCA) believing that bringing home the stockpiles of cash would mean huge jobs and growth here in the U.S. The act provided a “tax holiday,” allowing corporations to return their deferred profits at an astonishingly low 5.25 percent — instead of the statutory 35% rate.
Companies — including Pfizer, Merck & Co., Hewlett-Packard, Johnson & Johnson, and IBM — immediately took advantage. Together, these five corporate giants repatriated $88 billion from their offshore accounts located in well-known tax havens such as Switzerland, the Cayman Islands, and the Bahamas. According to the IRS, some 843 companies followed suit resulting in the repatriation of $312 billion in qualified earnings. In total, the companies received $265 billion in tax deductions between 2004 to 2006.
Alliance of Good-Governance Groups Submits Comments in Support of Rules Combating Earnings-Stripping
WASHINGTON, D.C. — In comments submitted to the U.S. Department of the Treasury on Monday, good government watchdogs called on the administration to protect a recent safeguard aimed at combating offshore tax avoidance.
The Financial Accountability and Corporate Transparency Coalition (FACT Coalition) sent a letter to the IRS in support of the Department of the Treasury’s Final and Temporary Regulations under Section 385 on the Treatment of Certain Interests in Corporations as Stock or Indebtedness. The full letter can be read below or downloaded here.
Sometimes the long drive towards a more equitable and reasonable tax system feels like it’s one step forward, two steps back.
This month, the two steps back we risk taking come in the form of unraveling a Treasury rule established under the Obama administration. Thanks to an executive order from the Trump administration, Section 385 is currently being reviewed by the Treasury Department. The rule takes aim at curbing corporate tax haven abuse — the hallmark of a tax system rigged for the few biggest multinational corporations. Preliminary estimates from Treasury found that it’s impact on offshore tax avoidance would be significant considering that the rule would raise $7.4 billion over 10 years.
Statement of the FACT Coalition on the “Joint Statement on Tax Reform”
WASHINGTON, D.C. — A group of Administration and Congressional leaders known as the “Big Six” released a joint statement outlining their priorities for reforming the tax code Thursday.
