Should We Give The Worst Tax-Dodging Corporations A Huge Break?
A bill before Congress would give these tax dodgers a huge break and let them bring the money back without paying their taxes, as long as they loan some of the money for use rebuilding our infrastructure. This would make the honest, patriotic companies that kept jobs, production and profit centers in the US look like suckers.
The Partnership to Build America Act (sponsored by Sen. Michael Bennet (D-Colo.) and Rep. John Delaney (D-Md.)) would let U.S. multinational corporations bring home offshore profits tax-free if they use some of the money to buy bonds in an “infrastructure bank.” This bank will help fund badly needed infrastructure projects. The funding is badly needed because Republicans have been obstructing Congress from fully funding needed infrastructure projects.
It would be much cheaper from a federal budgeting perspective to simply finance the bank’s start-up with a direct appropriation of funds. To meet the $50 billion funding goal through the bills’ proposed mechanism would require the federal government to grant about $70 billion to $100 billion in tax breaks to multinational corporations.
Citizens For Tax Justice points out that this plan rewards the very tax-dodging companies that are part of the reason the U.S. is running a budget deficit.
… profits in tax havens get a bigger tax break when “repatriated” under such a tax amnesty. The U.S. tax that is normally due on repatriated offshore profits is the U.S. corporate tax rate of 35 percent minus whatever was paid to the government of the foreign country. Profits that American companies claim to generate in tax havens are not taxed at all (or taxed very little) by the foreign government, so they might be subject to the full 35 percent U.S. rate upon repatriation — and thus receive the greatest break when the U.S. tax is called off.
The tax-dodgers are bribed with additional incentives to please let us use some of this money to maintain our infrastructure. The worst ones get them most from this. Companies that did the right thing lose out. This is a classic example of how the wealthiest rig things in their favor. This hurts small businesses here, hurts citizens and drains the government (We the People) of funding for our schools, etc.
The “deferral” loophole lets companies avoid paying taxes on profits made outside the country until they bring the profits back.
Giant multinational corporations have moved jobs, production and profit centers out of the country to take advantage of this loophole and avoid paying their taxes.
These companies are holding between $1.5 and $2 trillion outside of the country, away from investment in the U.S. and from their shareholders.
If the full amount currently deferred were brought back, it could bring in as much as $525 billion-$700 billion of tax revenue that We the People could use to get things done that really, really need to get done, such as modernizing our infrastructure, hiring teachers, building high-speed rail, and retrofitting buildings to be energy-efficient.
Companies that keep jobs, production and profit centers inside the U.S. don’t get this huge tax loophole and look like suckers for helping their country.
If we let these companies get away with this, of course there will be terrific pressure to do it even more, and for more companies to join in moving jobs, production and profit centers out of the country.