From: The Honorable Mark Pocan
As Congress debates principles around tax reform, it is critical that any overhaul of our tax code levels the playing field for the American people instead of continuing to tilt the balance in favor of corporate interests. While hard-working families and
small business across the country pay their fair share, large corporations take advantage of loopholes in our system to hide profits overseas and avoid paying their taxes. We need a tax code that incentivizes companies to stay in the United States and transparency
requirements that shed light on firms engaging in tax avoidance and profit shifting activities.
Please join me in cosponsoring the Tax Fairness and Transparency Act, a bill that takes the following steps to create a more equitable tax system:
- Cracks down on earnings stripping, a tool companies use to profit from corporate tax inversions. Earnings stripping is a method of avoiding taxes in which U.S.-based groups are loaded up with debt owed to the affiliated foreign company; the U.S. entity
then pays high levels of interest on this debt, which nets them significant tax deductions or entirely wipes out their domestic taxable income. This bill limits the tax deductions a corporation may claim to a level at which the U.S. entity’s share of interest
on debt is proportionate to the U.S. entity’s share of earnings. Without the option to shift profits overseas through earnings stripping, corporations lose a major incentive to move abroad.
- Ends tax deferral on overseas corporate profits. Currently firms can defer paying taxes on their foreign profits until that money is repatriated back to the U.S., often prompting those firms to hold the money abroad indefinitely. This bill closes the loophole
and requires corporations to pay U.S. taxes on active income.
- Requires all publicly traded companies to make available to the American people information about multinational tax and business activities on a country-by-country basis, and total profits and taxes paid during the period covered by the report. A recent
report from the FACT Coalition details how the tax strategies of public companies directly impact shareholder risk and market function. Country-by-country tax reporting information must be made publicly available so investors and the general public are
sufficiently able to assess investment risk and identify profit-shifting activities.
The deadline for original cosponsors is 10:00 AM on Thursday, April 6. Please contact Evan Giesemann (firstname.lastname@example.org) with any questions or if you would like to be
an original cosponsor.
Member of Congress