Tax

Senate Bill Would Plug Key Offshore Loophole and Reduce Incentives for Outsourcing in Tax Overhaul

WASHINGTON, D.C. — Senate lawmakers introduced legislation Thursday that would make it harder for multinational corporations to game the offshore provisions in the newly adopted tax overhaul.  Sponsored by Sen. Amy Klobuchar (D-MN), the Removing Incentives for Outsourcing Act (S.3674) would ensure that tax rates for profits booked offshore are applied on a per-country basis, rather than on a worldwide average basis — reducing the chance of gaming.

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Tax Transparency Fights Tax Avoidance

By Gary Kalman

Justice Brandeis once famously said that “sunlight is the best disinfectant.”  It is a quote advocates for government and corporate transparency have repeated each time we are asked if any of “this stuff” makes a difference.  For the record, it does.

The latest evidence comes from a recent report produced by two German academics looking at whether a European Union (EU) tax transparency initiative had any measurable impact on corporate behavior.

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The Paradise Papers: A Year Later

By Jacob Wills

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

By Peter Della-Rocca

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 shelterssecretive 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

By Robbie Silverman

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

By Richard Phillips

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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Sven Giegold: Global tax cooperation remains crucial

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).

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ITEP Report: Understanding and Fixing the New International Corporate Tax System

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.

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