Instead of rewarding companies that stashed money in overseas tax havens, Lisa McCormick says Congress should enact the Corporate Tax Dodging Prevention Act, which would close loopholes by taxing the $2.4 trillion that American corporations currently hold offshore at the full corporate tax rate of 35 percent.
McCormick says Republican President Donald Trump put forward a tax plan that would cut the corporate tax rate by more than half, but she calls that a bad idea because it rewards companies for cheating taxpayers by evading their responsibility to share the cost of our government.
“The Institute on Taxation and Economic Policy (ITEP) examined federal income taxes paid or not paid by 258 of America’s largest and most profitable corporations in the eight years between 2008 and 2015 — and learned those companies reported total pretax U.S. profits of more than $3.8 trillion,” McCormick said. “During that time, corporate taxes funded just 10 percent of our government. The economy was booming and growing at an annual average rate of 3.9 percent between 1950 and 1960, when the corporate tax rate was over 50 percent and those business taxes provided 28 percent of our government revenue.”
While the federal corporate tax law ostensibly requires big corporations to pay a 35 percent corporate income tax rate, the 258 corporations in the ITEP study paid on average slightly more than half that amount, or 21.2 percent over the 2008 to 2015 period.
Many companies paid far less, including 18 that paid nothing in federal corporate income taxes at all over the entire eight-year period, at least 15 of which are in the stocks that paid dividends to Wall Street billionaire Phil Murphy, a former Goldman Sachs executive who McCormick says is trying to buy the Democratic nomination for governor.
McCormick says Murphy, who would be a big beneficiary from Trump tax cuts, profits off corporate tax dodgers and that makes him unfit to be governor and unworthy of Democratic Party support.
The Institute on Taxation and Economic Policy released a report in March showing that 100 large, profitable corporations paid zero or less in federal income taxes at least once in the last eight years.
Eighteen corporations, including General Electric, International Paper, Priceline.com and PG&E, received tax refunds from the IRS on their combined profits from 2008 to 2015.
The study also found that 48 corporations paid an effective tax rate of less than 10 percent over that period. On average, large, profitable corporations in the United States paid an effective federal income tax rate of 21.2 percent over the eight-year period, slightly over half than the statutory 35 percent tax rate.
Citing that evidence showing many profitable corporations evade paying any U.S. income taxes, Sens. Bernie Sanders (I-Vt.) and Brian Schatz (D-Hawaii) introduced a bill to eliminate tax breaks encouraging corporations to shift jobs and profits offshore. Rep. Jan Schakowsky (D-Ill.) introduced a companion bill in the House.
“Here’s the simple truth. You can’t be an American company only when it benefits you. You also have to be an American company when it comes to paying your fair share of taxes,” Sanders said. “Instead of giving a $550 billion tax break to corporate tax dodgers as President Trump has proposed, our legislation will raise at least $1 trillion in new revenue over the next decade.”
“Every year, we give over $100 billion in tax breaks to multinational corporations that send profits and jobs overseas,” said Schakowsky. “The Corporate Tax Dodging Prevention Act closes those loopholes and makes multinational corporations pay the taxes they already owe on offshore profits. I am proud to join Sens. Sanders and Schatz in our effort to make our tax code fairer and generate much-needed revenue to invest in priorities for America’s working families.”
“The Sanders-Schatz-Schakowsky legislation would stop letting American corporations avoid paying U.S. taxes on profits they hold offshore, stashed in tax havens like Bermuda or the Cayman Islands,” said McCormick. “The bill would make several other reforms, including a ban on American corporations pretending to be foreign companies for tax purposes or using other deceptions to justify an offshore tax haven.”
“Abuse of offshore tax havens is one reason why American corporations today pay far less than the 35 percent tax rate that is supposed to apply to their profits,” said McCormick, who called Trump’s plan to ‘repatriate’ money from those corporate tax dodgers “a reward for cheating American workers who pat their taxes.”
McCormick said the legislation is supported by the AFL-CIO, Public Citizen, Americans for Tax Fairness, U.S. Public Interest Research Group, the American Federation of State, County and Municipal Employees (AFSCME), the Institute on Taxation and Economic Policy and several other organizations throughout the country.
To read the bill, click here.
To read a summary of the bill, click here.
To read a list of the top 12 corporate tax dodgers, click here.