Real Tax Reform Should Close Offshoring Loopholes
The U.S. House held a hearing today about tax reform. Fair Share's signed on to a letter, via the FACT Coalition about what we think real reform is. Our priorities for tax reform are to make sure that every business plays by the same rules -- that large multinational compaies shouldn't be able to dodge taxes by hiding money overseas.
“Offshore loopholes and tax haven abuse cost U.S. taxpayers $150 billion per year,” explained Clark Gascoigne, Interim Director of the FACT Coalition, upon submitting the comments to the Committee. “It’s an enormous amount of lost revenue that must instead be shouldered by small businesses, domestic corporations, and ordinary individuals.”
“At the same time, tax haven abuse facilitates the outflow of trillions of dollars from developing countries—exacerbating global poverty and inequality and increasing our national security risks,” continued Mr. Gascoigne. “It’s high time that Congress reform our tax code to close these loopholes—protecting the most vulnerable among us and evening the playing field for domestic businesses to compete fairly with multinational corporations. We hope that the Committee chooses to move in this direction.”
The FACT Coalition’s submission to the Ways and Means Committee specifically highlights a number of issues, including:
- How the tax code is riddled with loopholes inserted by special interests resulting in the ability for large, multinational corporations to shift their tax responsibilities to small businesses and average taxpayers.
- How companies use the current system of deferral to indefinitely put off paying taxes until the profits are “brought back” to the U.S.
- The practices of inversions and earnings stripping, where a domestic company purchases a foreign firm that’s usually much smaller and reincorporates overseas in a low or no tax jurisdiction. The company then loads down the domestic entity with so much debt as to obviate any potential tax payments.
- How Congress should avoid embracing changes to the tax code that provide false “solutions” like a shift to a territorial tax system or proposals to create patent or innovation boxes.
> Download a PDF of the FACT Coalition’s submission.