House Failure to Prevent Companies from Getting this Tax Break if They Shift Corporate Address Offshore to Dodge Taxes is Even More Shocking
WASHINGTON – Americans for Tax Fairness today decried passage in the U.S. House of Representatives of “bonus depreciation” legislation that would handout $287 billion in corporate tax breaks over 10 years. A Motion to Recommit the legislation was defeated that would have limited the tax break to two years and denied bonus depreciation to “inverted” corporations that change their residence from the United States to a foreign country, typically a tax haven, in order to avoid paying U.S. taxes.
“Bonus depreciation legislation is hypocritical, ineffective and grossly unfair,” said Frank Clemente, Executive Director of Americans for Tax Fairness. “Not a dime of this tax break is paid for, numerous studies have shown it is relatively ineffective, and it continues a string of costly corporate tax extenders being passed by the House while funding for the most basic of human needs gets denied unless other spending is cut to pay for it.”
With respect to the defeat of the Motion to Recommit Clemente said: “The House just voted to give a big tax break to corporations that reject America by reincorporating offshore to dodge taxes. Average Americans will be forced to pick up the tab. This is a new low in giving handouts to special interests in Washington.”
The Motion to Recommit amendment focuses attention on the recently-hot issue of corporate inversions, a process by which a U.S. company renounces its corporate “citizenship” and re-establishes its official address in another country, often a tax haven. Although the change takes place primarily on paper, those corporations can dodge billions of dollars in U.S. federal taxes by undertaking the maneuver. Pfizer unsuccessfully attempted an inversion in May; Medtronic is planning to reincorporate in Ireland; and Walgreens will announce later this month if it will abandon the U.S. for Switzerland, another tax-haven.
Inversions allow corporations to continue to take advantage of the things that make the United States the best place in the world to do business, but enable them to avoid paying their fair share in federal taxes for those services. Walgreens would dodge $4 billion in U.S. federal taxes over the next 5 years, according to a recent analysis.
Americans for Tax Fairness sent a letter to members of Congress urging their opposition to H.R. 4718.
Americans for Tax Fairness is a diverse coalition of 425 national and state organizations that collectively represent tens of millions of members. The organization was formed on the belief that the country needs comprehensive, progressive tax reform that results in greater revenue to meet our growing needs. ATF is playing a central role in Washington and in the states on federal tax-reform issues.