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Pedestrians wearing face masks walk past a commercial advertisement billboard of the American multinational financial services corporation and credit card business American Express in Hong Kong. (Photo: Budrul Chukrut/SOPA Images/LightRocket via Getty Images)
A trio of Senate Democrats on Monday unveiled a plan to force U.S.-based multinational corporations to "pay their fair share" by hiking the tax rate on companies' overseas earnings, taking steps to prevent businesses from shifting profits to foreign tax havens, and eliminating other Republican-authored incentives for offshoring.
"Our plan is simple: Corporations should pay their fair share, just like Ohio families do, and they shouldn't get a tax break for shipping workers' jobs overseas."
--Sen. Sherrod Brown
Senate Finance Committee Chairman Ron Wyden (D-Ore.), one of the lead authors of the new framework (pdf), slammed the 2017 Republican tax law as a "massive giveaway" to large companies and said Congress must take action to "ensure mega-corporations pay their fair share to fund critical investments in the American people."
"That starts with ending incentives to ship jobs overseas and closing loopholes that allow companies to stash their profits in tax havens, and, instead, rewarding companies that invest in the United States," said the Oregon Democrat. "Our framework would not only generate critical revenue to pay for President Biden's infrastructure package, it would encourage additional investment in the United States and its workers."
Wyden joined Sens. Sherrod Brown (D-Ohio) and Mark Warner (D-Va.) in introducing the new proposal as U.S. Treasury Secretary Janet Yellen delivered a speech arguing for a global minimum tax, a separate but related effort to halt the decades-long international "race to the bottom" on corporate taxation and finance a multi-trillion dollar infrastructure package.
\u201cIt's past time mega-corporations pay their fair share in taxes and create good-paying jobs in the United States. I have the plan to do it. https://t.co/QQIrg2zeH5\u201d— Ron Wyden (@Ron Wyden) 1617653903
Whereas the GOP's 2017 tax law exempted much of American corporations' foreign earnings from U.S. taxes--a policy critics decried as a major incentive for offshoring--the Senate Democrats' new proposal would repeal that handout and increase the so-called Global Intangible Low-Taxed Income (GILTI) tax, a levy designed to limit the benefits of shifting profits to overseas tax havens.
According to a Joint Committee on Taxation report released last month, the average tax rate on U.S. multinational corporations fell by more than half following implementation of the Republican tax law.
"Republicans set the GILTI rate at just half of the U.S. corporate tax rate, creating a strong preference to earn income overseas," the three Democratic senators write in their proposal. "It is necessary to shrink the gap between the tax rate on U.S. earnings and foreign earnings. This would reduce incentives to shift more profit abroad, and help level the playing field between multinational corporations and corporations operating primarily in the U.S."
The senators don't propose a specific GILTI rate, but the Biden administration is advocating that it be raised from 10.5% to 21% as part of its broader effort to fund a roughly $2.3 trillion infrastructure proposal.
The Senate Democrats' plan also takes aim at incentives for foreign-derived intangible income (FDII), a system the lawmakers characterize as further encouragement for companies to "offshore factories."
While the Biden White House supports a complete repeal of FDII incentives, Wyden, Brown, and Warner suggest overhauling the system to "reward companies that continually invest in ways that help grow our economy and strengthen our workforce, rather than just rewarding companies with huge profits."
"For decades, our tax code has rewarded corporations that shut down production in the U.S. and move American jobs overseas, and the 2017 Republican tax law only made it worse, with its 50% off coupon for corporations that move jobs to Mexico or China," Brown said in a statement. "Our plan is simple: Corporations should pay their fair share, just like Ohio families do, and they shouldn't get a tax break for shipping workers' jobs overseas."
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A trio of Senate Democrats on Monday unveiled a plan to force U.S.-based multinational corporations to "pay their fair share" by hiking the tax rate on companies' overseas earnings, taking steps to prevent businesses from shifting profits to foreign tax havens, and eliminating other Republican-authored incentives for offshoring.
"Our plan is simple: Corporations should pay their fair share, just like Ohio families do, and they shouldn't get a tax break for shipping workers' jobs overseas."
--Sen. Sherrod Brown
Senate Finance Committee Chairman Ron Wyden (D-Ore.), one of the lead authors of the new framework (pdf), slammed the 2017 Republican tax law as a "massive giveaway" to large companies and said Congress must take action to "ensure mega-corporations pay their fair share to fund critical investments in the American people."
"That starts with ending incentives to ship jobs overseas and closing loopholes that allow companies to stash their profits in tax havens, and, instead, rewarding companies that invest in the United States," said the Oregon Democrat. "Our framework would not only generate critical revenue to pay for President Biden's infrastructure package, it would encourage additional investment in the United States and its workers."
Wyden joined Sens. Sherrod Brown (D-Ohio) and Mark Warner (D-Va.) in introducing the new proposal as U.S. Treasury Secretary Janet Yellen delivered a speech arguing for a global minimum tax, a separate but related effort to halt the decades-long international "race to the bottom" on corporate taxation and finance a multi-trillion dollar infrastructure package.
\u201cIt's past time mega-corporations pay their fair share in taxes and create good-paying jobs in the United States. I have the plan to do it. https://t.co/QQIrg2zeH5\u201d— Ron Wyden (@Ron Wyden) 1617653903
Whereas the GOP's 2017 tax law exempted much of American corporations' foreign earnings from U.S. taxes--a policy critics decried as a major incentive for offshoring--the Senate Democrats' new proposal would repeal that handout and increase the so-called Global Intangible Low-Taxed Income (GILTI) tax, a levy designed to limit the benefits of shifting profits to overseas tax havens.
According to a Joint Committee on Taxation report released last month, the average tax rate on U.S. multinational corporations fell by more than half following implementation of the Republican tax law.
"Republicans set the GILTI rate at just half of the U.S. corporate tax rate, creating a strong preference to earn income overseas," the three Democratic senators write in their proposal. "It is necessary to shrink the gap between the tax rate on U.S. earnings and foreign earnings. This would reduce incentives to shift more profit abroad, and help level the playing field between multinational corporations and corporations operating primarily in the U.S."
The senators don't propose a specific GILTI rate, but the Biden administration is advocating that it be raised from 10.5% to 21% as part of its broader effort to fund a roughly $2.3 trillion infrastructure proposal.
The Senate Democrats' plan also takes aim at incentives for foreign-derived intangible income (FDII), a system the lawmakers characterize as further encouragement for companies to "offshore factories."
While the Biden White House supports a complete repeal of FDII incentives, Wyden, Brown, and Warner suggest overhauling the system to "reward companies that continually invest in ways that help grow our economy and strengthen our workforce, rather than just rewarding companies with huge profits."
"For decades, our tax code has rewarded corporations that shut down production in the U.S. and move American jobs overseas, and the 2017 Republican tax law only made it worse, with its 50% off coupon for corporations that move jobs to Mexico or China," Brown said in a statement. "Our plan is simple: Corporations should pay their fair share, just like Ohio families do, and they shouldn't get a tax break for shipping workers' jobs overseas."
A trio of Senate Democrats on Monday unveiled a plan to force U.S.-based multinational corporations to "pay their fair share" by hiking the tax rate on companies' overseas earnings, taking steps to prevent businesses from shifting profits to foreign tax havens, and eliminating other Republican-authored incentives for offshoring.
"Our plan is simple: Corporations should pay their fair share, just like Ohio families do, and they shouldn't get a tax break for shipping workers' jobs overseas."
--Sen. Sherrod Brown
Senate Finance Committee Chairman Ron Wyden (D-Ore.), one of the lead authors of the new framework (pdf), slammed the 2017 Republican tax law as a "massive giveaway" to large companies and said Congress must take action to "ensure mega-corporations pay their fair share to fund critical investments in the American people."
"That starts with ending incentives to ship jobs overseas and closing loopholes that allow companies to stash their profits in tax havens, and, instead, rewarding companies that invest in the United States," said the Oregon Democrat. "Our framework would not only generate critical revenue to pay for President Biden's infrastructure package, it would encourage additional investment in the United States and its workers."
Wyden joined Sens. Sherrod Brown (D-Ohio) and Mark Warner (D-Va.) in introducing the new proposal as U.S. Treasury Secretary Janet Yellen delivered a speech arguing for a global minimum tax, a separate but related effort to halt the decades-long international "race to the bottom" on corporate taxation and finance a multi-trillion dollar infrastructure package.
\u201cIt's past time mega-corporations pay their fair share in taxes and create good-paying jobs in the United States. I have the plan to do it. https://t.co/QQIrg2zeH5\u201d— Ron Wyden (@Ron Wyden) 1617653903
Whereas the GOP's 2017 tax law exempted much of American corporations' foreign earnings from U.S. taxes--a policy critics decried as a major incentive for offshoring--the Senate Democrats' new proposal would repeal that handout and increase the so-called Global Intangible Low-Taxed Income (GILTI) tax, a levy designed to limit the benefits of shifting profits to overseas tax havens.
According to a Joint Committee on Taxation report released last month, the average tax rate on U.S. multinational corporations fell by more than half following implementation of the Republican tax law.
"Republicans set the GILTI rate at just half of the U.S. corporate tax rate, creating a strong preference to earn income overseas," the three Democratic senators write in their proposal. "It is necessary to shrink the gap between the tax rate on U.S. earnings and foreign earnings. This would reduce incentives to shift more profit abroad, and help level the playing field between multinational corporations and corporations operating primarily in the U.S."
The senators don't propose a specific GILTI rate, but the Biden administration is advocating that it be raised from 10.5% to 21% as part of its broader effort to fund a roughly $2.3 trillion infrastructure proposal.
The Senate Democrats' plan also takes aim at incentives for foreign-derived intangible income (FDII), a system the lawmakers characterize as further encouragement for companies to "offshore factories."
While the Biden White House supports a complete repeal of FDII incentives, Wyden, Brown, and Warner suggest overhauling the system to "reward companies that continually invest in ways that help grow our economy and strengthen our workforce, rather than just rewarding companies with huge profits."
"For decades, our tax code has rewarded corporations that shut down production in the U.S. and move American jobs overseas, and the 2017 Republican tax law only made it worse, with its 50% off coupon for corporations that move jobs to Mexico or China," Brown said in a statement. "Our plan is simple: Corporations should pay their fair share, just like Ohio families do, and they shouldn't get a tax break for shipping workers' jobs overseas."