WTF? Ok, I guess I should actually say: this is not shocking but because Chuck Schumer just made me yell "WTF?" and ruin my schedule for the rest of the day...
The loud yelling and clapping you just heard came cascading down from executive suites of all the tax-dodging big corporations who must be dancing in the halls. "Bi-partisanship" is about to fleece the American people--yet again. And it's being led by the presumed Democratic majority leader come 2016, Chuck Schumer.
This is entirely absurd:
Two senior senators – one Republican, one Democrat – proposed on Wednesday that the government largely end the taxation of United States corporate profits overseas, but with a mandatory, one-time tax on such profits to pay for an expansive highway and infrastructure program.
The plan, by Senators Rob Portman, Republican of Ohio, and Chuck Schumer, Democrat of New York, is similar to earlier proposals from President Obama and former Representative Dave Camp, once the chairman of the House Ways and Means Committee. The current chairman, Representative Paul D. Ryan of Wisconsin, greeted the proposal warmly as well.
“What’s exciting to me is we now have a bipartisan road map on how to do international tax reform to make the American worker more competitive,” Mr. Portman said. “This is not about the boardroom. This is about the shop floor.”
And:
The current system taxes overseas profits at 35 percent – minus taxes paid to the host country – once a business brings its income back to the United States. That has prompted American-based multinational companies to, in effect, leave trillions of dollars abroad, either in cash or as investments in foreign operations.
Senators Portman and Schumer would largely end the taxation of those repatriated profits, instead imposing a light annual tax on overseas income, whether it comes home or not. That, they said, would end the incentive to leave profits abroad or reinvest them in overseas operations. Mr. Obama’s international tax plan would set that minimum overseas profit tax at 14 percent. The new proposal does not set a rate, but Mr. Portman said the administration’s was far too high.
Ridiculous.
I've written a lot about this, including back in 2011 when I pointed out how correct then-Sen. Carl Levin was when he criticized a proposed "tax holiday" as a bogus incentive for corporations to repatriate tens of billions of dollars in profits stashed overseas--bogus because it had already been tried years before and failed because, surprise, corporations reneged on most of the key pieces of the deal (particularly, around investing the repatriated, free money into new jobs--guess where it went instead...stock buy backs and more CEO benefits).
In this case, oh, thank you, "bi-partisanship", what is being proposed is "a light annual tax on overseas income"...
To which Citizens for Tax Justice says:
Sens. Rob Portman (R-Ohio) and Chuck Schumer (D-NY) today released a long-awaited tax reform plan that reads like a wish list for multinational corporations.
The Senate Finance Committee working group’s report provides recommendations for restructuring the federal government’s international corporation tax rules. The plan is long on misguided ideas and short on specifics. The heart of the plan is a proposal to move to a territorial tax system in which all corporate income reported in countries other than the United States– including notorious tax havens such as Bermuda and the Cayman Islands– would be exempt from U.S. corporate income taxes.
As Citizens for Tax Justice has noted, such a system would dramatically increase the incentive for U.S. multinational corporations to use accounting maneuvers and paperwork to shift their profits from the United States to offshore tax havens. At a time when corporations have accumulated more than $2.1 trillion in offshore holdings, much of which may be U.S. profits that are reported as “earned” in zero-tax jurisdictions such as the Cayman Islands, the first step toward corporate tax reform should be removing incentives to offshore profits — not providing even more.[emphasis added]
And:
Under the Portman-Schumer plan, big multinationals would find new avenues for tax avoidance whether they report their income in the U.S. or shift profits to tax havens — truly a “win-win” for corporations seeking to avoid paying their fair share. But the broad outlines of the Finance Committee’s recommendations make it clear that the plan would be a big loss for the rest of us.
From
Americans for Tax Fairness:
“The framework fails on three counts. It appears to create a territorial tax system, under which most U.S. corporate profits earned offshore are no longer taxed here at home. This will provide huge incentives for corporations to invest overseas at the expense of U.S. jobs. It suggests a very low tax rate be paid on the $2 trillion in U.S. corporate profits that are currently offshore, much of it in tax havens, and that are untaxed here at home. This rewards companies that have been the most successful tax dodgers. It creates a giant new tax loophole, known as a patent or innovation box, which will exacerbate the current massive tax avoidance by high-tech and pharmaceutical companies.
“Corporate America recently succeeded in getting Congress to support trade promotion authority, which will result in the loss of jobs for American workers and disinvestment in our economy. The Schumer-Portman framework will do the same and result in large revenue losses needed to create an economy that works for all Americans.”
Bernie Sanders has not yet released a statement on the current proposal. But, earlier this year, evaluating candidates' tax plans and track record, I
wrote that Citizens for Tax Justice said that Sanders:
“has been the lone voice in the Senate fighting for legislation that would ensure that corporations and the wealthy pay their fair share,”
And he specifically opposed this scam allowing corporations to dodge paying a serious and fair tax on overseas profits.
I won't make any unfair projections about what the "presumed front runner" believes on this effort at "bi-partisanship" and will see if she makes a statement after consulting with her 200-person policy team, which will poll-test the idea.
But, this is, in some way, a perfect example of both why Bernie has tapped into a lot of energy and anger AND why the current system is entirely broken when it comes to protecting the people from big corporations and elite power: this is, pure and simply, a sell-out to big donors, big corporations and the wealthy, and a robbery of the U.S. Treasury. Giving big corporations a pretty big wet kiss when it comes to paying a "light annual tax" is robbery because it effectively means more money will be lifted out of the pockets of ordinary people...or safety net programs will be cut.
It's robbing society.