Submitted by PRWatch Editors on
In our new report on Fix the Debt, CMD reveals that part of the Fix the Debt's hidden corporate agenda is to push for new tax loopholes that would actually add to the deficit. Specifically, many Fix the Debt firms want to exempt money made offshore from taxation in the United States. Opening this new loophole would cost the Treasury some $1 trillion over 10 years according to Citizens for Tax Justice.
Now a new report makes the case that Washington shouldn't be creating more tax loopholes, they should be closing the ones that exist. According to the consumer group U.S. PIRG, closing loopholes that allow corporations to avoid taxes by pretending their profits are earned in offshore tax havens would net about $90 billion annually.
Corporate lobbyists often claim that closing these loopholes would drive companies to flee the U.S. and re-register themselves in low-tax countries, but PIRG is calling their bluff. "When corporations claim they'll flee the country if forced to pay their full tax bill, it's an empty threat," said Dan Smith, Tax and Budget Advocate for U.S. PIRG.
While it's easy for companies to threaten to relocate overseas, PIRG makes the case that the reality is very different and impractical.
While it's easy for companies to threaten to relocate overseas, the reality is that the two possible ways to do so are unpractical. The first is for a company to physically relocate most of its business activity to other countries. This option is unattractive to most companies because it is expensive and it forces them to forgo the benefits of proximity to America's markets, educated workforce, and infrastructure.
The more relevant option is for a company to reorganize its corporate structure to register with tax authorities as headquartered overseas. This reorganization process -- called "inversion" -- has become prohibitively difficult for most companies as a result of a series of bipartisan reforms over the past decade. Most recently, new rules issued by the Treasury Department in June 2012 require that inverted companies be treated as American companies for tax purposes unless the company proves that at least 25 percent of its business activity takes place in a foreign country.
Read the full report, "Who's Afraid of Inversion? Congress Can Clamp Down on Offshore Tax Havens".