Democrats introduce bill to curb tax havens
Rep. Lloyd Doggett, D-Texas, a member of the House Ways and Means Committee, and Senator Sheldon Whitehouse, D-R.I., a member of the Senate Finance Committee, introduced a pair of bills aimed at stopping corporations from using offshore tax havens and outsourcing jobs to other countries.
The first bill, the No Tax Breaks for Outsourcing Act, aims to level the playing field for domestic companies by ensuring multinational corporations pay the same tax rate on profits earned abroad as they do in the U.S. The bill would end some tax breaks for the oil and gas industry. It would also treating “foreign” corporations that are managed and controlled in the U.S. as domestic companies. It would also prevent multinationals from disproportionately loading up their U.S. subsidiaries with debt to shrink their tax bill.
The Stop Tax Haven Abuse Act would prohibit U.S. companies from electing to be treated as “foreign” for tax purposes and deeming corporations that are managed and controlled in the U.S. as domestic companies. The bill would give investors information about risky tax avoidance strategies by requiring corporations to disclose their country-by-country revenue, profits and employee count to the Securities and Exchange Commission. It would require repatriation of oversees money under the Tax Cuts and Jobs Act to be done immediately. The legislation would also limit “inversions” by maintaining the U.S. tax treatment of merged companies that retain a majority of U.S. ownership. It would also prevent investors from avoiding taxes through “swap” payments.
“By encouraging multinationals to invest abroad instead of here at home, it puts America last,” said Doggett in a statement. “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 Stop Tax Haven Abuse Act would also offer enforcement tools to the Treasury Department to compel foreign banks to follow existing law that requires disclosure of new bank accounts. It would provide rebuttable presumption in civil judicial, administrative tax, and SEC proceedings that U.S. taxpayers control the offshore entities they create. The bill would also require banks and brokers to disclose to the IRS beneficial ownership information they find while complying with existing anti-money laundering laws. The legislation includes anti-money laundering requirements for agents that form shell companies, along with streamlined processes for the IRS to investigate Swiss bank accounts and to enforce requirements that taxpayers disclose them.
“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,” said Whitehouse.