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Obama Budget Closes Tax Loopholes, Cuts Wasteful Spending, but Falls Short of Ending Offshore Tax Dodging
Statement of U.S. PIRG Tax and Budget Advocate Jaimie Woo on President Obama’s 2016 Budget Proposal.
"President Obama’s budget deserves praise for closing egregious offshore tax loopholes and preventing companies with enough lawyers from using tax havens to get their tax bill down to zero. Unfortunately it fails to end the incentive for wealthy multinationals to take advantage of tax havens, and would fall short of putting an end to offshore tax dodging.
"For years, some of America’s largest, most profitable companies have used accounting gimmicks to make profits made in America appear on the books in offshore tax havens, where they pay little to no tax. Tax haven abusers benefit from our educated workforce, infrastructure, and security and should not force the rest of us to foot their tax bill.
"The President’s plan rightly shuts the door on some of the most egregious loopholes companies use to game the system, especially by including provisions to curb inversions and earnings stripping. But while the door might be shut, it’s not locked. The President’s proposed 19 percent minimum tax rate on the foreign profits of American companies is a step in the right direction, but it nonetheless would reward companies that use accounting tricks to book profits to tax havens a big discount on the proposed statutory rate they’d otherwise pay.
"With this powerful incentive, companies will continue to search for other loopholes to exploit. The door to gimmicky tax dodging will only be locked when companies can’t get a tax discount for shifting their profits offshore, a principle that should also apply to the profits companies currently have booked offshore.
"When it comes to making critical investments while cutting out the waste, the President’s plan makes the right choices. We applaud the President for recognizing the need to bring transportation system into the 21st century by fixing roads and bridges and investing in rail and transit.
"We also applaud the President for calling on cuts to wasteful spending and special interest handouts. Deficit reduction shouldn’t be hard, and the budget plan goes after waste that would make average taxpayers shake their heads in disbelief. For example, the President proposes to nix billions worth of agricultural subsidies that mostly benefit agribusiness giants that don’t need taxpayer handouts."
Click here for a joint report by U.S. PIRG and the National Taxpayers Union, two groups with widely divergent views on tax and spending policy that came together to offer half a trillion dollars worth of deficit reduction recommendations.
Click here for a study done by U.S. PIRG and Citizens for Tax Justice identifying the most aggressive corporate tax avoiders.
Click here for a U.S. PIRG study on how offshore tax dodging hurts the average taxpayer.
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