Here's the press release from Carl Levin -- contact your Senators and urge them to sign-on and support this bill.
Ending tax-haven loopholes is smart way to bring down deficit
Author: Sen. Carl Levin
09-20-2013
Back in March when Congress failed to reach a deficit reduction agreement, we triggered budget sequestration – the unprioritized, across-the-board cuts that have hurt families, national security, life-saving research, students and seniors, and, according to the Congressional Budget Office, cut as much as a full percentage point from economic growth.
Our economy can’t afford that kind of damage. And yet, sequestration continues, and it will continue unless we act.
A balanced, bipartisan deficit reduction package is the only alternative. Balance requires three elements: First, cuts in discretionary spending – not mindless, meat ax sequestration, but targeted, prioritized cuts. Second, we need to reform entitlement programs. And third, we must add federal revenue.
Which brings me to my least-favorite four letter words: “loop” and “hole.”
The United States hemorrhages hundreds of billions of dollars in tax revenue each year to a relatively small group of multinational companies. These large, profitable companies are headquartered here, they do business here, and they benefit from the safety and stability of living and working in the United States. Yet they use an array of complex arrangements involving offshore tax loopholes to avoid paying their taxes. The Senate Permanent Subcommittee on Investigations, which I chair, has spent more than a decade examining these loopholes and the damage they do.
Michigan’s working families and small business owners don’t have an army of lawyers and lobbyists to concoct ever-more-creative tax gimmicks. So they’re left to pick up the burden left when our biggest, most profitable companies use tactics like these:
Microsoft’s U.S parent company sold intellectual property rights to a foreign subsidiary, then licensed them back, shifting profits from products that were developed, made and sold in the United States to an offshore tax haven and paying almost no U.S. taxes on those profits.
Hewlett Packard, which socked billions of dollars in revenue away in offshore subsidiaries, managed to bring huge sums back to the United States, which should have triggered a big tax bill, using a series of short-term loans from two offshore subsidiaries to get around rules that require tax payments when money comes back to the United States.
Apple managed what we consider the Holy Grail of offshore tax avoidance, setting up subsidiaries, which hold a large part of the $100 billion in cash Apple holds offshore, that are literally invisible for tax purposes. These subsidiaries are incorporated in Ireland but controlled from the United States. Because U.S. tax law bases tax residency on the place of incorporation, and Irish tax law bases tax residency on where a corporation is controlled, Apple says these subsidiaries are tax resident nowhere and therefore paid almost no corporate income tax to any country. For tax purposes, they’re ghost companies.
We should close these loopholes on principle, regardless of deficits or sequestration. They’re simply unfair. But surely now, with sequestration doing so much harm, we should close these loopholes and use the revenue we recover as part of the foundation of a balanced deficit reduction plan.
That’s why on Sept. 19 I introduced the Stop Tax Haven Abuse Act, a comprehensive effort to end these loopholes and gimmicks and bring more fairness to the tax code. This bill, cosponsored by Sens. Sheldon Whitehouse of Rhode Island, Mark Begich of Alaska and Jeanne Shaheen of New Hampshire, would tackle an array of offshore corporate tax abuses.
It would end tax breaks that encourage businesses to move jobs and operations offshore. It would end the legal fiction that allows corporations to avoid U.S. tax on income they route through offshore subsidiaries that are nothing more than a post office box, or that allow multinationals to avoid taxes by literally “checking a box” on their tax forms to shield offshore subsidiaries from taxes.
The provisions of our bill would, according to official estimates, reduce the deficit by about $220 billion. If we used that revenue as one part of a balanced deficit reduction plan, we could avoid six years or more of sequestration. And the public supports that plan: Last year, a poll showed that 75 percent of Americans support closing offshore tax loopholes to reduce the deficit.
We have plenty of legitimate disagreements here in Washington. But all of us should be able to agree that these offshore tax loopholes are unfair. All of us should see the opportunity before us: to end these gimmicks, relieve our economy of the burden of sequestration, and relieve our families and small businesses from the tax burden a handful of large, profitable companies have dumped on them.
- See more at: http://www.levin.senate.gov/newsroom/in_the_news/article/ending-tax-haven-loopholes-is-smart-way-to-bring-down-deficit/?section=alltypes#sthash.b2CcRVdm.dpuf
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