For Immediate Release
Baucus Corporate Tax Proposal Closes Loopholes, but Leaves Incentives to Shift Profits to Offshore Tax Havens
WASHINGTON - “The corporate tax reform proposal released by Senate Finance Committee Chairman Max Baucus closes some of the most egregious tax loopholes, but falls short of putting an end to incentives for large multinationals to make their profits look like they were earned offshore.
“For years, corporations have been able to hire armies of tax lawyers to exploit loopholes to book their profits to subsidiaries in tax havens, where they pay little to no tax. Often these subsidiaries are mere P.O. boxes where no real business is done. Academic experts estimate that the U.S. loses $90 billion in revenue annually from tax haven abuse by large multinational corporations. Corporate tax dodging forces average taxpayers and responsible small businesses to pick up the tab through cuts to public programs, higher taxes, or more debt.
“The Finance Committee proposal rightly identifies this problem, but the two options laid out for a minimum tax on foreign profits leave in place strong incentives to shift profits offshore, and could allow a multinational to reap more than a five percentage point tax discount for claiming it earned its profits offshore. While this is a step in the right direction, companies will still exploit every loophole they can find to get that windfall.
“Chairman Baucus’s discussion draft does deserve praise for closing some of the most-abused offshore tax loopholes. Ending the ‘check-the-box’ loophole, which allows multinationals to ‘disregard’ foreign subsidiaries for tax purposes simply by checking a box, has been estimated to save nearly $80 billion over ten years. This loophole was one of many used by Apple to avoid paying a dime in taxes to any country on $44 billion in income.
“Congress doesn’t need to wait for comprehensive tax reform to put an end to loopholes like ‘check-the-box.’ Senator Levin’s Stop Tax Haven Abuse Act (S.1533) closes the most egregious offshore tax loopholes, saving taxpayers over $220 billion over the next decade. Lawmakers looking to cut the deficit should start there.”
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