Corporate group: WH tax proposals off base
A corporate tax reform coalition blasted President Obama’s international tax proposals on Tuesday, saying they would accelerate the sort of offshore maneuvers that Democrats want to eliminate.
The Alliance for Competitive Taxation said that the White House’s proposal to impose a minimum tax on multinational corporations’ foreign earnings would only increase the number of offshore tax deals known as inversions.
In an inversion, companies lower their tax bill by shifting their legal address abroad, while often leaving much of their operations in the U.S.
“The administration’s headquarters tax misses the mark: it would increase foreign takeovers of innovative American companies, encourage foreign governments to raise taxes on US companies, and greatly increase the cost of tax compliance for globally engaged US companies,” ACT said in a statement.
Roughly 40 corporate titans are on ACT’s membership list, including Bank of America, Coca-Cola, General Electric, Google and Nike.
Obama’s budget this year includes a 14 percent tax on corporate profits already parked abroad, to be used for infrastructure funding, and a 19 percent minimum tax on future foreign profits.
According to ACT, that minimum tax means that any company that didn’t pay a 22.4 percent rate to another government would owe the U.S. Treasury. Because other countries don’t have that sort of minimum tax, ACT says, the U.S.’s business climate would look even worse to companies deciding where to place their headquarters.
The group’s statement comes as a bipartisan group of lawmakers is eyeing the offshore cash held by U.S. corporations as they seek more funding for the nation’s crumbling infrastructure. ACT and other business groups and tax reform coalitions oppose that idea, saying it would hurt the chances for a broader overhaul of the tax code.