Washington, DC – Today, Senator Sheldon Whitehouse (D-RI), a member of the Senate Finance Committee, and Congressman Lloyd Doggett (D-TX), a member of the House Ways and Means Committee, introduced the No Tax Breaks for Outsourcing Act and the Stop Tax Haven Abuse Act. Under the Trump Tax law, companies that ship jobs and invest overseas are eligible for special tax rates that may be half the domestic corporate tax rate and possibly even tax-free. The No Tax Breaks for Outsourcing Act would level the playing field for domestic companies by ensuring that multinationals pay the same tax rate on profits earned abroad as they do in the United States, ending these new tax incentives to outsource jobs and shift profits offshore.
The Stop Tax Haven Abuse Act would close egregious offshore tax loopholes that allow companies with armies of lawyers to avoid taxes by making profits earned here in America magically appear on the books in tax havens like the Cayman Islands. It would also crack down on the type of illegal tax evasion by the superrich that was revealed by the Panama Papers and Paradise Papers leaks.
“While President Trump talks big about creating American jobs, his tax law opened new loopholes that encourage companies to make investments overseas,” said Whitehouse. “We need to end these costly and harmful giveaways and level the playing field for businesses that grow jobs and raise wages here at home.”
“Trump promised that he would put a stop to the outsourcing of American jobs, but his tax law does just the opposite,” said Doggett. “By encouraging multinationals to invest abroad instead of here at home, it puts America last. It is flat wrong that the corner pharmacy should have to pay a tax rate that is substantially higher on its operations here than Pfizer does offshore. The No Tax Breaks for Outsourcing Act would treat both the same, leveling the playing field for small and domestic-oriented businesses. The Stop Tax Haven Abuse Act would shut down the complex shell games that allow corporations and the superrich to hide their profits in island tax havens, forcing working families to make up the difference.
The No Tax Breaks for Outsourcing Act would repeal the Trump Tax offshoring incentives by:
- Taxing income from overseas subsidiaries at the same rate that applies to domestic income.
- Repealing the Trump Tax sweetheart giveaways to the oil and gas industry.
- Treating “foreign” corporations that are managed and controlled in the U.S. as the domestic companies they really are.
- Cracking down on so called “inversions” by maintaining the U.S. tax treatment of merged companies that retain a majority of U.S. ownership.
- Preventing multinationals from disproportionately loading up their U.S. subsidiaries with debt to shrink their tax bill, a policy Republicans stripped out of the final tax bill.
The Stop Tax Haven Abuse Act would limit tax gaming by:
- Prohibiting American companies from electing to be treated as “foreign” for tax purposes and deeming corporations that are managed and controlled in the U.S. as the domestic companies they really are.
- Providing investors with information about risky tax avoidance strategies by requiring corporations to disclose their country-by-country revenue, profits, and employee count to the SEC.
- Ending interest-free loans to multinational companies by requiring repatriation under the Trump Tax law to be done immediately.
- Limiting “inversions” by maintaining the U.S. tax treatment of merged companies that retain a majority of U.S. ownership.
- Closing a loophole that allows investors to avoid taxes through “swap” payments.
It would also provide authorities with new tools to fight tax evasion, including:
- Enforcement tools for Treasury to compel foreign banks to follow existing law that requires disclosure of new bank accounts.
- A rebuttable presumption in civil judicial, administrative tax, and SEC proceedings that U.S. taxpayers control the offshore entities they create.
- A requirement that banks and brokers disclose to the IRS beneficial ownership information they discover while complying with existing anti-money laundering laws.
- Anti-money laundering requirements for agents that form shell companies.
- Streamlined processes for the IRS to investigate Swiss bank accounts and to enforce requirements that taxpayers disclose them.
The No Tax Breaks for Outsourcing Act has been endorsed by the following groups, including labor, small business, faith, and other public interest organizations:
Advocacy for Principled Action in Government, Alliance for Retired Americans, American Family Voices, American Federation of Government Employees (AFGE), American Federation of Labor & Congress of Industrial Organizations (AFL-CIO), American Federation of State, County and Municipal Employees (AFSCME), American Federation of Teachers, Americans for Tax Fairness, Americans for Democratic Action (ADA), Campaign for America’s Future, Center for Popular Democracy, Coalition on Human Needs, Communications Workers of America (CWA), Congregation of Our Lady of the Good Shepherd, US Provinces, CREDO Action, Daily Kos, Democrats.com, Economic Policy Institute (EPI) Policy Center, Financial Accountability and Corporate Transparency (FACT) Coalition, Franciscan Action Network, Friends of the Earth, Global Financial Integrity, Health Care for America Now, Indivisible, Institute for Policy Studies – Program on Inequality and the Common Good Institute on Taxation and Economic Policy (ITEP), Interfaith Center on Corporate Responsibility, International Association of Machinists & Aerospace Workers, International Brotherhood of Teamsters, International Federation of Professional & Technical Engineers (IFPTE), AFL-CIO, International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW), Jobs with Justice, Jubilee USA Network, Main Street Alliance, MomsRising, National Advocacy Center of the Sisters of the Good Shepherd, National Coalition for the Homeless, National Education Association, National Employment Law Project, NETWORK Lobby for Catholic Social Justice, New Rules for Global Finance, Oxfam America, Patriotic Millionaires, People Demanding Action, Progressive Change Campaign Committee, Public Citizen, RootsAction.org, Service Employees International Union (SEIU), Small Business Majority, Take On Wall Street, Tax March, Union Veterans Council, AFL-CIO, UNITE HERE, United Steelworkers (USW), Voices for Progress, and Working America.