For Immediate Release
Public Citizen Calls on Obama Administration to Support the Passage of a Wall Street High Roller Fee
The President’s Tax Reform Proposal, a Theme of Tonight’s State of the Union, Omits Key Elements to Ensure Corporations Pay Their Fair Share
WASHINGTON - President Barack Obama’s latest tax reform plan, announced this weekend and expected to be one of the major themes of tonight’s State of the Union address, is laudable but is missing two key elements: the closure of international tax loopholes and a financial transaction tax, Public Citizen said today.
Positive ideas include modifying the capital gains tax, taxing big banks and instituting new individual tax credits. But Obama failed to address the problem of corporate tax inversions, which occur when corporations desert the U.S. by merging with companies headquartered in jurisdictions with lower taxes.
Today, U.S. Sens. Richard Durbin (D- Ill.) and Jack Reed (D-R.I.), and U.S. Reps. Sander Levin (D-Mich.) and Lloyd Doggett (D-Texas) reintroduced the Stop Corporate Inversions Act, a bill designed to help solve one of the problems of international tax avoidance. It would help ensure that fewer companies will escape their U.S. tax duty by shifting their headquarters on paper to countries with lower tax rates.
The measure would lower the threshold at which a company is defined as “inverted.” Currently, if 80 percent of a newly merged company is held by the same domestic shareholders as the previous corporation, it is considered inverted and treated as domestic for tax purposes. The measure would lower this to 50 percent. Multinational corporations still managed and controlled from the U.S. also would fall under the changed definition of an “inverted” company under the act.
“Congressional champions like Senators Durbin and Reed, and Representatives Levin and Doggett are leading the way to addressing the gaping holes in international tax code that allow profitable multinational corporations to reincorporate overseas as a way to reduce their tax rates,” said Susan Harley, deputy director of Public Citizen’s Congress Watch division. “Public Citizen calls on President Obama, as well as all members of Congress, to join with these champs to step up to the task of ensuring that corporations pay their fair share of the cost of government.”
What also was missing from the president’s proposal was any mention of using a Wall Street tax to gain revenue while tamping down market gambling. U.S. Rep. Chris Van Hollen (D-Md.) recently proposed such a “high roller” fee to curb Wall Street speculation. Though Obama’s plan called for a tax on the top banks that are over-leveraged, his proposal should have included a tax on trades by Wall Street banks,” Harley said.
“Just last week, U.S. Rep. Van Hollen made the commonsense suggestion that the U.S. should move forward in concert with European countries that are poised to institute an expected 0.1 percent tax on stock trades and other financial transactions,” said Harley. “President Obama’s proposal to tax big banks, though good, does not go far enough. He missed the opportunity to show the same courage as Rep. Van Hollen to rein in Wall Street’s high-speed, high-stakes gambling with a high roller fee. We urge the administration to take these steps in the future.
“The president’s over-emphasis on revenue neutrality may be a shared ideal with the Republican Party but it won’t get America past the ‘more cuts’ budgeting mentality that is defunding the nation’s social safety net,” Harley said.
Public Citizen is a national, nonprofit consumer advocacy organization founded in 1971 to represent consumer interests in Congress, the executive branch and the courts.