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Report: Pro-Austerity CEOs Seek to Widen Tax Haven Loophole
WASHINGTON - June 12 - In advance of a congressional hearing on tax havens, a new Institute for Policy Studies report reveals the massive windfalls members of the “Fix the Debt” campaign stand to gain from their proposals to widen tax haven loopholes.
The Fix the Debt campaign is a heavily funded corporate lobby group pushing for cuts to Social Security and Medicare and more corporate tax breaks. One of their main goals is a “territorial” tax system. This reform would increase incentives to exploit tax havens by permanently exempting U.S. corporations’ foreign earnings from U.S. federal income taxes. Fix the Debt Co-Founders Erskine Bowles and Alan Simpson made this reform a centerpiece of their recently released deficit reduction proposal. The House Ways and Means Committee will hold a hearing on June 13th to examine multinational corporations’ use of low or no-tax countries to shift profits offshore to avoid paying U.S. taxes.
Key findings from the new IPS report “Corporate Pirates of the Caribbean”:
· The 59 Fix the Debt member corporations that reported their offshore profits had a combined total of more than $544 billion at the end of 2012, up from $473 billion in 2011. The average offshore stash per company rose 15 percent last year to $9.4 billion.
· Currently, these profits are not subject to U.S. corporate income taxes unless they are brought back to the United States (also known as “repatriation”). If Congress adopts Fix the Debt’s proposed territorial tax system, these 59 companies would stand to win as much as $173 billion in immediate tax windfalls.
· The biggest potential winner is General Electric, which could reap a tax windfall of as much as $38 billion on its overseas earnings stash of $108 billion.
· The Fix the Debt member with the largest increase in offshore untaxed profits in 2012 among firms with more than $1 billion in offshore profits was Honeywell, with a 43 percent increase to $11.6 billion in 2012.
· Twenty-two firms reported increases of more than 20 percent in their untaxed offshore profits last year.
“These Fix the Debt corporations are like modern day pirates,” says report co-author Scott Klinger. “Their crews are not sword-wielding ruffians, but high-priced lobbyists and accountants who fight for, win, and then exploit loopholes in the tax code that allow them to avoid paying their fair share of the tax burden.”
“If these corporate CEOs were serious about strengthening the American economy, they wouldn’t be seeking more tax breaks that will only add to the national deficit,” adds Sarah Anderson, a report co-author.
The report is available here: http://www.ips-dc.org/reports/corporate_pirates
This is the latest in a series of IPS exposés on the Fix the Debt campaign.