For Immediate Release
42 Groups and 64,000 Americans Send Messages to Treasury Department Against Repeal of “Earnings Stripping” Rule
Trump Treasury Department Considering Rule Change That Would Make It Easier for Corporations to Dodge Taxes on Offshore Profits
WASHINGTON - Forty-two national organizations and more than 64,000 Americans sent comments in recent days to the Trump Administration’s Treasury Department to express their opposition to the administration’s announcement that it intends to modify or repeal the “earnings stripping” rule put in place under the Obama Administration last year to curb offshore tax dodging deals known as “inversions.” The rule is targeted for changes due to a Trump executive order in April. Yesterday, the Treasury Department closed the public comment period on the proposed rule change.
Americans for Tax Fairness, along with 41 other groups, sent a letter to the Treasury Department demanding that they retain the earnings stripping rule in its entirety. The full list of partner organizations and the full text of the letter is included below and linked here.
“The undersigned organizations, which collectively represent millions of members, strongly supports the … ‘earnings stripping’ rule. We recommend the Treasury Department retain this rule in its entirety. … Multinational corporations use a variety of accounting maneuvers to avoid paying their fair share of taxes. Last year, after a great deal of public comment, the Treasury Department adopted a rule to curb earnings stripping, which is one of these accounting maneuvers. … The rule should not be rescinded, and if modified, it should only be strengthened, not watered down.“
Additionally, Americans for Tax Fairness and Daily Kos generated more than 64,000 comments from the public sent directly to the Treasury Department to oppose repeal of the earnings stripping rule in favor of corporations paying their fair share of taxes. The comments read in part:
“That's why I support the current ‘earnings stripping’ rule, which is designed to discourage U.S. firms from doing an inversion. That’s when a U.S. corporation buys a foreign company in order to change its address, usually to a tax haven, to dodge U.S. taxes. The rule ended one type of manipulative financial arrangement multinational corporations use in an inversion to dodge taxes.”
For years, large American corporations have merged with smaller foreign companies to shift their legal address abroad to avoid paying the U.S. taxes they owe. From the Treasury Department’s own findings, the Final and Temporary Regulations under Section 385 on the Treatment of Certain Interests in Corporations as Stock or Indebtedness (T.D. 9790; 81 F.R. 72858), also known as the “earnings stripping” rule, is estimated to save $7.4 billion in revenue.
The full text of Americans for Tax Fairness letter to the Treasury Department is linked here.
Americans for Tax Fairness (ATF) is a diverse campaign of more than 425 national, state and local endorsing organizations united in support of a fair tax system that works for all Americans. It has come together based on the belief that the country needs comprehensive, progressive tax reform that results in greater revenue to meet our growing needs. This requires big corporations and the wealthy to pay their fair share in taxes, not to live by their own set of rules.