By Frank Clemente, Campaign Manager, Americans for Tax Fairness
It’s vacation season, so it’s perhaps fitting that a Maryland Congressman wants to offer America’s biggest corporations a tax holiday on overseas profits. While many folks head to the Caribbean for a holiday, the generous proposal of Rep. John Delaney (D-MD) would have excess corporate cash travelling the other direction—from island tax havens north to the U.S.—and all on the American taxpayer’s dime.
American corporations have some $2 trillion in profits stashed overseas, much of it in tax havens that charge little if any tax. Thanks to an unwise part of U.S. corporate tax law known as “deferral,” the IRS can’t tax those profits until they come home in the form of dividends or other payouts to shareholders.
With deep across-the-board budget cuts looming in the fall, tax reformers in Congress should abolish deferral (and other corporate loopholes) and thereby raise what Congress’s tax scorekeeper has estimated at $600 billion in revenue over the next decade.
Instead, Congressman Delaney wants to let corporations bring back profits stashed overseas at a very low – or zero – tax rate if some of the money is used to invest in an infrastructure bank to fund transportation and other infrastructure projects. Delaney claims that this new bank is being funded without any public money, but we will in fact all pay for it in billions of dollars in lost tax revenue.
What’s more, the biggest tax-dodging corporations will hold controlling interest in the bank. Maybe they’ll hold the first board meeting in the Cayman Islands.