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With Fiscal Cliff Deal Finalized, Congress Should Close Costly Corporate Tax Loopholes and End Special Interest Handouts
Statement of U.S. PIRG Tax and Budget Advocate Dan Smith on the fiscal cliff deal and the continuing need for tax and budget reforms.
“The fiscal cliff is behind us, but the bipartisan budget agreement has left both parties looking for ways to further reduce the deficit in the coming weeks to avert the next fiscal precipice. Congress should end costly special-interest giveaways, starting with closing the offshore tax loopholes that allow wealthy individuals and corporations to avoid up to $150 billion in taxes each year.
“Although the fiscal cliff deal did make important progress on reducing the deficit in a balanced way, it was disappointing to see the fiscal cliff deal extend two loopholes that help large U.S. companies shirk part of their tax bill by shifting income on paper to subsidiaries in offshore tax havens. The ‘active financing exception’ and the ‘controlled foreign corporation look-through’ rule will cost taxpayers $12.7 billion over the next two years. But with more budget battles ahead, Congress will have ample opportunity to close these types of offshore tax loopholes that put responsible small businesses at a competitive disadvantage and are unfair to ordinary taxpayers who are forced to pick up the $150 billion tab.
“Big agribusiness was also let off the hook in this budget deal with the extension of the Farm Bill, retaining billions of dollars in wasteful subsidies. These subsidies disproportionately go to the largest agribusinesses, and actually underwrite the production of junk food ingredients at a time of record childhood obesity. U.S. PIRG has joined grassroots groups from across the political spectrum to call for an end to such special interest handouts. As Congress searches for ways to reduce the deficit while continuing to fund public priorities, Big Ag subsidies should immediately get the ax.
“A notable bright spot of the budget deal was the extension of the American Opportunity Tax Credit, which provides 11 million families with students a $2,500 annual tax credit. This will help keep college in reach at a time when our recovering workforce needs even more college graduates.
“Moving forward from the fiscal cliff, the new Congress needs to reform the corporate tax code to end unfair offshore tax loopholes that pad the profits of the largest corporations, end direct handouts to special interests, and protect critical public priorities like the American Opportunity Tax Credit.”
For more information on the impact of offshore tax havens, see U.S. PIRG’s report, “Picking up the Tab”: http://uspirg.org/reports/usf/picking-tab
For a list of 30 companies that paid more to lobby Congress than they did in taxes, see U.S. PIRG and Citizens for Tax Justice’s report, “Representation without Taxation”: http://uspirg.org/reports/usp/representation-without-taxation
U.S. PIRG, the federation of state Public Interest Research Groups, is a nonprofit, nonpartisan public interest advocacy organization. http://www.uspirg.org
For more information on the Tax and Budget Reform campaign, click here. Follow us on Twitter (http://twitter.com/uspirg) and Facebook (http://facebook.com/uspirg).
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