A bill recently introduced in Congress seeks to ensure that multinational corporations pay the same tax rate on profits earned abroad as they do in the United States.
The No Tax Breaks for Outsourcing Act would end tax incentives created by the 2017 Trump tax bill while generating revenue to fund priorities like infrastructure.
“The 2017 Trump Tax Scam created new loopholes for corporations to offshore American jobs while funneling profits into overseas tax havens. We must immediately end these perverse incentives that reward exporting American jobs and instead invest in American workers and businesses as we build back better,” Sen. Chris Van Hollen (D-MD), one of the bill’s sponsors, said.
Van Hollen introduced the bill along with Sens. Sheldon Whitehouse (D-RI), Dick Durbin (D-IL), Kirsten Gillibrand (D-NY), Jeff Merkley (D-OR), Elizabeth Warren (D-MA), and Jack Reed (D-RI). Rep. Lloyd Doggett (D-TX) and more than 100 members of the House are also listed as cosponsors.
“American families and small businesses fight to stay afloat in a pandemic economy while big corporations rake in profits from shifting jobs overseas,” Whitehouse said. “It’s time to roll back incentives for big multinationals to ship jobs abroad and start helping American workers and domestic companies compete on a level playing field.”
In addition to requiring multinational companies to pay the same tax rate on profits earned abroad as they do in the United States, the bill would also apply the tax on foreign profits on a country-by-country basis to prevent companies from dodging taxes by setting up webs of subsidiaries in low-tax countries. The lawmakers cited a study that estimates that closing offshore tax loopholes could save $77 billion in revenue annually.
“The 2017 Trump-GOP tax law encourages multinationals to both outsource good-paying American jobs and shift profits abroad,” Doggett said. “It’s time to add more jobs here in America and insist that profits earned from American consumers are taxed in America, not hidden in some island tax haven. The No Tax Breaks for Outsourcing Act could recover hundreds of billions of dollars in corporate taxes rightly owed on those profits, which could be invested to promote even more economic growth here in the USA.”
The legislation has the support of over 90 major public interest and labor groups, including the National Education Association (NEA); Service Employees International Union (SEIU); United Steelworkers (USW); UNITE HERE; Union Veterans Council, AFL-CIO; and Working America, AFL-CIO, among others.
“The No Tax Breaks for Outsourcing Act will remove incentives for companies to take their business abroad and close the corporate inversion loophole,” Durbin said. “This bill would repeal harmful Trump-era policies that reward multinational corporations that offshore investments. It’s time to level the playing field for American businesses.”