FOR IMMEDIATE RELEASE
July 21, 2015
Tax Extenders Would Renew Two Wasteful Tax Haven Loopholes
U.S. Cannot Afford These Special Interest Spending Earmarks
Washington, DC – The FACT (Financial Accountability and Corporate Transparency) Coalition is today calling on Congress to reject two tax extenders that are nothing more than offshore loopholes which allow U.S. companies to dodge billions worth of taxes.
The expiring tax provisions, known as “extenders” are generally renewed with little debate and no revenue offset. This year, the Senate Finance Committee is debating them out in the open, showing that many of the provisions are specialized corporate loopholes.
Two of the most egregious loopholes allow U.S. multinationals to avoid U.S. taxes on their profits by making it appear as though they were generated offshore and the Finance Committee is entertaining an amendment from Senators Portman, Isakson, and Roberts to make them permanent.
The first is what is known as the CFC Look-Through Rule, which allows corporations to create “stateless income” by treating income, at least for tax purposes, as having been earned in a low or no-tax country where the company has no employees, no operations, and no real economic activity taking place. Instead, most of the places contain only a mailbox.
The Active Financing Exception is the second offshore loophole. While passive income (interest, dividends, royalties, etc.) is meant to be taxable even if it is kept offshore, the Active Financing Exception allows multinationals to defer paying tax on interest booked in foreign subsidiaries, providing another way in which they manipulate their tax bills and thus avoid paying their taxes.
“It’s high time Congress takes a stand against corporations that shift profits offshore and avoid paying their fair share of taxes,” said Rebecca Wilkins, Executive Director for the FACT Coalition. “When Congress incentivizes corporations to continue avoiding their taxes by manipulating their tax bills, average American taxpayers have to pick up the tab in the form of cuts to public programs, higher taxes, and more debt,”
“We should end each and every loophole that allows a set of larger companies to play a rigged game,” said Nathan Proctor, national campaign director with Fair Share. “Instead, Congress wants to renew tax loopholes that allow companies to hide profits in offshore tax havens, and, in addition, make them permanent. That’s a permanent outrage. We think it’s time that everyone played by the same set of rules.”
“Loopholes shouldn’t be the status quo. We must ensure that our tax system is fair, transparent and benefits all of us,” said Eric LeCompte, Executive Director, Jubilee USA Network.
“America is being bled of billions in revenue every year because multinational corporations are gaming tax giveaways. It’s shameful that some senators are pushing to make these tax handouts permanent,” said Susan Harley, deputy director of Public Citizen’s Congress Watch division. “In a time of reduced social programs and crumbling infrastructure, these loopholes should be closed once and for all, otherwise the U.S. is leaving the door wide open to tax avoidance by companies that can and should be paying their fair share.”
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Media Contact:
Nick Jacobs
FACT Coalition
202-841-1466
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Founded in 2011, the Financial Accountability and Corporate Transparency (FACT) Coalition unites civil society representatives from small business, labor, government watchdog, faith-based, human rights, anti-corruption, public-interest, and international development organizations. We seek an honest and fair corporate tax code, greater transparency in corporate ownership and operations, and commonsense policies to combat the facilitation of money laundering and other criminal activity by the legitimate financial system.