Corporate profits

Elizabeth Warren calls corporate profit proposals a ‘wet kiss’ to tax cheats

President barack obamaThe plan to change the way U.S. multinationals are taxed is a “giant kiss” to corporations that avoid tax, the senator said. Elizabeth Warren (D., Mass.) said Wednesday.

Ms Warren took aim at the bipartisan consensus on corporate tax policy that has emerged in recent years, warning that lighter taxes on the foreign income of US companies would disadvantage small businesses and reward larger corporations for their tax evasion at the stranger.

“Lobbyists and lawyers are excited about the prospect of tax reform,” Ms. Warren said during a speech at the National Press Club. “The tax authorities are in turmoil. But when I look at the details, I see the same rigged game — a game where Congress hands out billions in benefits to well-connected corporations.

She said any proposed reduced tax rate on offshore profits “is a giant kiss for tax evaders who have already parked $2.1 trillion offshore.”

Ms. Warren’s entry into the international debate on corporate tax policy shows how fragile bipartisan agreement on the issue is and shows some of the challenges facing advocates of lower corporate tax rates and new international tax rules.

Under current law, US corporations owe the full 35% tax rate on worldwide income. They get foreign tax credits for payments to other governments and only pay residual US tax if and when they bring the money home. This system creates incentives for US companies to seek low tax rates around the world and leave their profits offshore.

For big business groups and Republicans, the answer is clear: move to a tax system like those in other countries with a lower rate and fewer restrictions on the repatriation of foreign profits. These policies, they say, would reduce incentives for companies to consider so-called inversions – transactions that place a company’s tax address outside of the United States and have become more popular in recent years.

It is a position to which Mr. Obama has gradually moved throughout his presidency. He now backs an overhaul of the income-neutral corporate tax system with a corporate tax rate of 28%, a minimum tax of 19% on foreign income and a one-time tax of 14% on those over $2 trillion in profits stored offshore whether or not the companies bring the money home.

The administration’s approach is designed to remove inefficient economic distortions from the tax system, raising the same amount of money but “in a less stupid way,” said Jason Furman, chairman of the Council of Economic Advisers at Mr. Obama earlier this month.

Administration officials said their plan would be tough on business. “Our framework for corporate tax reform will simplify compliance and provide tax relief for small businesses, while tightening our international tax system to close loopholes that shrink the U.S. tax base by allowing multinational corporations to avoid pay U.S. taxes,” the Treasury Secretary said. Jacob J.Lew said earlier this year.

Matt Millervice president of the Business Roundtable, said the United States had lost 51 Fortune Global 500 companies since 2000. “The facts are stubborn – America’s outdated tax system helps push businesses and assets overseas at a breakneck pace,” said Mr. Miller, whose organization represents big business. leaders. “Congress and the administration need to focus on making America competitive again. This is what will attract investment and keep business in America.

Despite conceptual support from Republicans such as House Speaker Paul Ryan, this corporate tax plan has not advanced through Congress and is unlikely to become law at any time during Mr. Obama’s presidency. .

Ms. Warren has been critical of each of Mr. Obama’s ideas, and her stance could pressure Democratic presidential candidate Hillary Clinton to side with her or Mr. Obama.

Pointing to the steady decline in US corporation tax revenue as a share of the budget over the past 60 years, Ms Warren said any corporate tax changes should bring in more money to the government. The 14% single rate is a “juicy smooch” that allows companies to reap the benefits of their overseas tax planning, Ms Warren said. Republicans proposed even lower single rates.

Just when other countries are starting to get tough and tax evaders may finally need to move some of their money to the United States, Washington’s main reform idea is to give tax evaders major relief. tax,” she said.

The 19% minimum tax, she said, simply tells businesses to invest outside the United States to get a lower rate. She also criticized the idea of ​​an “innovation box”, an idea supported by Sens. Charles Schumer (D., NY) and Rob Portman (R., Ohio), saying it would make paying many taxes “optional” for big pharma and technology companies.

Continued

Republican candidates push bold tax plans

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