Washington, D.C.—Senator Dick Durbin (D-IL) and Representative Lloyd Doggett (D-TX) introduced legislation on Wednesday to prevent the Federal Reserve and Treasury Department from providing coronavirus financial assistance to “inverted” companies — U.S. domestic corporations that moved their official headquarters offshore for the primary purpose of avoiding U.S. taxes. The American Assistance for American Companies Act prohibits inverted domestic corporations from taking advantage of certain financial assistance and tax incentives made possible under the CARES Act. These incentives include net operating loss carrybacks, aid through the Federal Reserve’s lending facilities, and an increase in the business interest limitation. Under the legislation, companies may reverse their inversion — thereby becoming a U.S. entity subject to the U.S. corporate tax rate — in order to qualify for coronavirus relief programs. The Federal Reserve released guidelines in May opening the door to economic aid for U.S. subsidiaries of foreign corporations, which would include inverted companies.
Erica Hanichak, government affairs director of the Financial Accountability and Corporate Transparency (FACT) Coalition, issued this statement:
“The U.S. Treasury is our societal insurance policy; we all pay taxes each year so that — among other things — the government is able to aid us in times of crisis. That insurance policy breaks down when certain groups fail to pay their fair share. It’s all the more harmful when those failing to contribute are among the wealthiest multinational corporations. Corporations that have renounced their American citizenship to dodge taxes have not contributed to our societal insurance policy. These tax dodgers should not stand to benefit from the very system they have undermined by moving their tax address offshore. Senator Durbin and Representative Doggett’s bill provides a critical safeguard against corporate abuse at this time of national crisis, and keeps taxpayer dollars going to where they are most needed: supporting critical public services and reinvigorating the U.S. economy.”
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