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Washington, D.C. – The U.S. Public Interest Research Group today submitted comments to the Senate Finance Committee’s Business Income Tax and International Tax Working Groups, urging lawmakers to close corporate tax loopholes that allow multinational corporations to avoid U.S. tax.
Launched in January by Chairman Orrin Hatch and Ranking Member Ron Wyden, the working groups are now seeking input from interested stakeholders on how best to “overhaul the nation’s broken tax code.”
U.S. PIRG submitted a comment urging Senate Finance Committee members to close loopholes that allow U.S. multinationals to avoid U.S. taxes by book profits to subsidiaries in tax havens like the Cayman Islands. Offshore tax loopholes cost $90 billion in lost revenue every year. The comments call on Congress to crack down on corporate inversions, steer clear from any form of corporate tax holiday, and to eliminate two egregious loopholes, the Controlled Foreign Corporation (CFC) Look-Through Rule and the Active Financing Exception.
“Our loophole-ridden corporate tax code creates winners and losers. The winners are a narrow set of large multinationals that boast armies of tax lawyers and accountants, and the losers are average taxpayers and small business owners who are left to foot the bill,” said Jaimie Woo, Tax and Budget Advocate for U.S. PIRG. “Profitable corporations continue to benefit from America’s infrastructure, education system, security and large consumer market, and yet find tricky ways of not paying for it.”
Other recommendations include ending deferral so that American corporations must pay the U.S. taxes they owe on profits that have been booked offshore for tax purposes, and preventing the federal government from awarding contracts to American corporations that have changed the address of their headquarters to a foreign country for tax purposes.
The bipartisan working groups are working with the nonpartisan Joint Committee on Taxation (JCT) to produce an in-depth analysis of options, and plan on producing legislative recommendations within specific policy areas by the end of May.
“Closing loopholes that let companies use Cayman Islands P.O. boxes to avoid taxes should not be a partisan issue and we urge the Senate Finance Committee to act on these recommendations to develop a fairer tax code,” added Woo.
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