Month: July 2014

On July 25 the House of Representatives approved a Republican bill that would expand the child tax credit for better off families while doing nothing to extend or make permanent a 2009 provision that expands the credit to the working poor. President Obama has proposed to make permanent the 2009 provision before its scheduled expiration date at the end of 2017, which Congressional Republicans have refused to do.

Figures published by Citizens for Tax Justice illustrate how nationally and in each state, making permanent Obama’s provision would mostly help those families making under $40,000 in 2018, while the Republican bill (H.R. 4935) would mostly help those making over $100,000.

The child tax credit (CTC) provides a maximum tax break of $1,000 times however many children under age 17 a family has. If the family’s income is so low that this amount ($1,000 times the number of children under age 17) exceeds their entire income tax liability, they can receive a refundable credit, which means they actually receive money from the IRS.

The refundable part of the CTC is limited to 15 percent of their earnings above a certain threshold. (The total CTC including the refundable portion cannot exceed $1,000 per child.) That earnings threshold was lowered to $3,000 by the 2009 provision enacted under President Obama. If the 2009 provision expires as scheduled at the end of 2017, the earnings threshold will rise to $14,750, which means it will be much more difficult for very low-income working parents to claim the full credit.

While House Republicans would allow that provision to expire, their bill, H.R. 4935, would expand the CTC in ways that benefit better off families. It would index the $1,000 credit amount for inflation, which would help only those families with enough earnings to receive the full credit even with the higher earnings threshold. The Republican bill would also increase the income level at which the CTC starts to phase out from $110,000 to $150,000 for married couples. Finally, that $150,000 level for married couples and the existing $75,000 income level for single parents would both be indexed for inflation thereafter.

Given that both proposals are projected to cost around $11 billion each year that they are in effect, the House Republican proposal has the effect of shifting money that is going to low-income working families towards better off families.

While most of us consider ourselves upstanding, taxpaying citizens, imagine if Uncle Sam had a rule that stated individuals must report all their income to the IRS–unless it’s “not practicable” or too difficult to do so. And imagine if the government left it entirely up to taxpayers to decide what “too difficult” means.

Under such loose standards, federal revenue from individual taxes likely would plummet and more taxpayers would take advantage and stash their income in such a way that they could claim it would be impractical to report it to Uncle Sam.  The problem is that this “not practicable” standard is not imaginary. It actually exists and is applied to corporations’ offshore income.

While much media attention recently has focused on the tax loophole that permits inversions, or corporations changing their business address to a foreign postal code to avoid U.S. taxes, an equally toothless regulation from the Financial Accounting Standards Board (FASB) allows hundreds of Fortune 500 corporations and other highly profitable companies to avoid telling Uncle Sam how much money they have parked offshore and whether or how much they have paid in taxes to foreign governments on this cash. It’s an important issue to examine because rules that allow corporations to permanently hoard earnings offshore and technically never bring them to the United States means the U.S. Treasury is missing billions in needed tax revenue.

While loose rules mean we will never know exactly how much money all U.S. companies all holding offshore to avoid U.S. taxes, accounting rules require publicly traded companies to report their offshore earnings to shareholders. Among the Fortune 500, $2 trillion is parked offshore. A CTJ analysis of their financial filings finds that if this money were brought to the United States, these companies would owe $550 billion in taxes.

It’s worth taking a step back to discuss how we got here and what we can do to fix this. Regarding offshore profits, FASB rules state companies must either estimate the tax bill that it would pay on repatriation of their foreign profits, or must state that they are unable to calculate this bill. Not surprising, the vast majority of companies disclosing offshore cash take advantage of this loophole and claim, following the exact wording of the FASB rule, that it is “not practicable” to calculate their tax bill on repatriation. A recent CTJ report found that of the 301 Fortune 500 corporations that disclose holding offshore case, 243 use the “not practicable” loophole.

Tax experts long have suspected that this claim is absurd: multinationals typically employ an army of accountants to help monitor their tax strategies at home and abroad, and they very likely have a good idea of the potential tax hit from repatriating offshore cash. A recent informal disclosure by Medtronic—one of the companies currently attempting an inversion—backs this up. A Medtronic representative recently told the Minneapolis Star Tribune that the company has paid a foreign tax rate of between 5 and 10 percent on its “permanently reinvested” foreign income, which means the company would face a tax rate of 25 to 30 percent on repatriation. This disclosure is notable because it’s completely at odds with what the company has officially told shareholders in its annual reports (including the one released the same week as this informal disclosure): that it is unable to make this calculation.

The simultaneous disclosure and non-disclosure on the part of Medtronic illustrates perfectly what many have long suspected: that many if not all companies that refused to disclose the potential tax bill on repatriation know full well what they would pay, and choose not to disclose this information because FASB rules give them an easy way out.

But there’s an easy fix here. FASB could easily rewrite its regulations in a way that would require Fortune 500 corporations to disclose whether their offshore profits are in tax havens.

Regulations currently require companies to disclose “[t]he amount of the unrecognized deferred tax liability […] if determination of that liability is practicable or a statement that determination is not practicable.”

Removing the “if practicable” clause and simply requiring companies to disclose “the amount of the unrecognized deferred tax liability” would end the spectacle of companies like Medtronic concealing their use of tax havens from Congress and the public.

Improving disclosure of the potential tax bills on the offshore profits of multinationals is not an academic exercise: better information on this important topic would benefit millions of shareholders in these corporations and federal policymakers who are being asked to enact even more tax breaks for the biggest multinationals.

Disclosure of potential tax bills is equally vital for decisions currently being made in the halls of Congress. Corporations continue to lobby for all kinds of exceptions to the tax rules, including a tax holiday that would allow them to bring their offshore profits to the United States tax free. Congressional tax writers would presumably be much less interested in granting a so-called tax holiday for foreign profits if full disclosure revealed that much of these profits were being held in low-tax havens such as Bermuda and the Cayman Islands. 

Gene Simmons rocks. The front man for glam-band Kiss rocked decades ago, he rocks now, and he will continue to rock into his old age. Few Americans who came of age in the 1970s would contest this assertion.

But Simmons’ views on tax policy are a little more questionable. Earlier this week, Washington Post, fact-checker Glenn Kessler usefully picks apart Simmons’ recent claim that “[t]he 1 percent pays 80 percent of all taxes” and that “[f]ifty percent of the population of the U.S. pays no taxes.”

Simmon’s “50 percent” assertion is apparently a slightly garbled version of former presidential candidate Mitt Romney’s infamous assertion that 47 percent of Americans pay no federal income taxes. Romney’s claim had the virtue of being narrowly true, although (as we’ve shown) highly misleading: the income tax is only one of the ways in which the federal government collects tax revenue, and when other taxes (especially the payroll tax on workers’ earnings) are included, most of the “47 percent” are paying substantially more than nothing.

But Simmons’ claim isn’t just misleading—it’s ludicrously wrong. As Kessler points out, the best-off 1 percent of Americans don’t pay anywhere near “80 percent of all taxes.” As a CTJ/ITEP report shows, the top 1 percent really pay less than 24 percent of all federal, state and local taxes—and since this group enjoys almost 22 percent of all nationwide income, they’re likely not complaining very much.

Breathing fire was an integral part of Simmons’ stage act during the heyday of Kiss. But in the political arena, this sort of fire-breathing only confuses what should be a fairly straightforward debate over who pays taxes in America.  

Odds are that a Tuesday D.C. circuit court ruling declaring health care subsidies to be illegal is not a real threat to the Affordable Care Act, but it is an important reminder about the crucial role that tax subsidies play in making health insurance more affordable for millions of Americans and the lengths that some politicians are willing to go to block them.

On July 22, the U.S. Court of Appeals for the District of Columbia Circuit ruled in Halbig v. Burwell that Affordable Care Act (ACA) tax subsidies are illegal in the 36 states that do not have state-run health exchanges. If the D.C. Circuit Court ruling holds, it would mean that 5 million Americans who received subsidies could see their premium costs go up as much as 76 percent.

The case was decided by a three-judge panel, and the decision will likely be reversed when the Obama administration takes the case to the full D.C. Circuit. If the full court upholds the decision, the case could make its way to the U.S. Supreme Court given that just hours after the ruling, the U.S. Court of Appeals for the 4th Circuit ruled in a similar case that the IRS acted appropriately in interpreting slightly ambiguous legislative language to mean Congress’s clear intent was to provide subsidies to both the federal and state exchanges. 

While much of the media attention surrounding the ACA up until now has focused on the individual mandate and its related tax penalty, one of the most beneficial aspects of the health care law is the $940 billion in tax subsidies that will be targeted over the next decade to individuals purchasing health insurance. A study from earlier this year found that the average person eligible qualified for an annual subsidy of about $2,890 to purchase health insurance on an exchange.

The D.C. Circuit ruling would upend these important subsidies. While the court declared that congressional intent on the issue of the tax subsidies was not clear, anyone even distantly following the congressional debate surrounding the ACA knows that its writers fully intended the federally-run exchanges to provide the tax subsidies in exactly the same way as the state-run exchanges.

The good news is that the decision does not affect any subsidies being dispensed now.

Even if this or a similar case were to somehow make it to the Supreme Court (the only court that would actually be able to halt the subsidies), it would take years and, as Ezra Klein notes, the Supreme Court would not want to take any part in ripping “insurance from tens of millions of people due to an uncharitable interpretation of congressional grammar.” On top of this, if the Supreme Court took the radical step of striking down the tax subsidies following the D.C. court’s logic, it is possible that the federal government could simply take administrative actions to work around the ruling by handing the federal government infrastructure behind the federal run state exchanges over to state authorities.

Since the president proposed and Congress passed the Patient Protection and Affordable Care Act of 2010, it has faced criticism and challenges, mostly from the extreme right wing. The U.S. Supreme Court upheld the act as the law of the land in June 2012. In spite of technical glitches when the health exchanges rolled out last fall, millions have enrolled. Consumers can no longer be denied health insurance due to pre-existing conditions, and millions of people under age 26 now have health coverage because they can be on their parents’ plans.

Continual challenges to the law may show just how polarized our nation is, but it doesn’t change the fact that consumers who now have access to health insurance are much better off today than they were four years ago. It would behoove those who continue to raise legal challenges to think about that. 

What the heck is a derivative and why do we care?

A derivative is a financial instrument whose value and performance depends on another asset. For example, let’s say a lender owns mortgages worth $100 million. The lender can bundle those together and sell interests in the mortgage pool until all $100 million worth is sold. But if, instead, he sells derivatives contracts whose performance is tied to the performance of the mortgage pool, the lender can sell many times the original face value of the mortgages. As a result, he magnifies the return and also the risk of the pool of mortgages. Anyone remember AIG and the 2008 financial crisis?

The advantages and disadvantages of derivatives are many, but I’d like to focus on just two:

1)      the use of derivatives to game the tax system, and

2)      how derivatives contribute to the financialization of our economy.

On Tuesday the Senate Permanent Subcommittee on Investigations questioned hedge fund managers about their use of a complicated financial derivative known as “basket options” to avoid both taxes and regulatory limits on excessive borrowing. Representatives from Barclays and Deutsche Bank, which developed the strategy that they sold to hedge funds, also testified.

It’s just the latest in a series of investigations about the misuse of derivatives for tax purposes. See, for example, earlier reports about the J.P. Morgan Whale Trades and how offshore entities use derivatives to dodge taxes on U.S. dividends. While there are plenty of reasons why financial managers use derivatives, chief among them is avoiding taxes.

Tax-avoidance derivatives are created to take advantage of loopholes that give some special treatment to particular taxpayers, industries, or types of income. For example, if I own a partnership interest, part of the income I receive may be ordinary income subject to my highest marginal tax rate and some of it may be long-term capital gains that are taxed at a maximum income tax rate of 20 percent. On the other hand, if I own a derivative tied to the performance of a particular partnership and I keep the derivative for at least a year, all of my income may be treated as long-term capital gains. When Congress got wind of this game, they shut it down some years ago.

Unfortunately, Congress just can’t keep up with all of the derivatives that the financial industry invents to game the tax system. That’s the main reason why we need a tax system that taxes all kinds of income at the same rates. Whenever Congress passes a special rule that benefits a certain type of transaction or taxpayer, tax attorneys and accountants quickly come up with ways for their wealthy clients to qualify for the tax break in ways that Congress never intended.

Derivatives also contribute to the financialization of the economy—an increase in the size and importance of the financial sector relative to the overall economy. In 1950, financial services accounted for 2.8 percent of the U.S. gross domestic product. By 1980, that number was up to 4.9 percent and in 2008 in was 8.3 percent.

At some point—and many believe we are there or way past there—continued financialization of the economy has major negative consequences: rising inequality, reduced investment by other sectors, and risk magnification, just to name a few. Derivatives not only add to but compound these negative consequences because there is no limit to the amount of derivatives that can be issued.

Derivatives have another ugly side: many are created in offshore tax haven jurisdictions because they cannot be legally used in the U.S. (or other real countries). The derivatives that contributed to the collapse of Enron at the turn of the millennium and the staggering losses of AIG and other financial institutions in the 2008 financial meltdown were mostly related to transactions in offshore jurisdictions.

Kudos to Sen. Levin and the Permanent Subcommittee on Investigations for putting the spotlight on this important issue. A functioning Congress would take quick action to fix the problem. Sadly, however, too many of our legislators are fervent supporters of evil behavior when it comes to taxes.

Voters in 36 states will be choosing governors this November. Over the next several months, the Tax Justice Blog will highlight 2014 gubernatorial races where taxes are proving to be a key issue. Today’s post is about the race for governor in Iowa.

The gubernatorial race in Iowa pits veteran incumbent Terry Branstad (R) against challenger Jack Hatch (D). Branstad, 67, is asking Iowa voters to reelect him to an unprecedented sixth term as governor; if he wins, he will be the longest-serving governor in American history. In addition to his career in political office, Branstad has been an attorney, financial advisor, and president of Des Moines University. Hatch, 64, is a state senator from Des Moines and a former member of the Iowa House of Representatives. He is a real estate developer and businessman who founded Hatch Development Group, a company that builds affordable housing.

With an $850 million revenue surplus, it’s no surprise that both candidates favor tax cuts. However, the two men offer Iowans very different visions when it comes to overall tax policy. Hatch wants to target tax cuts to the middle class. His tax plan would raise Iowa’s per-child tax credit from $40 to $500, give two-earner households a credit of $1,000, and raise the filing threshold for individuals and families by $11,000. Hatch would also collapse Iowa’s eight tax brackets into four, and reduce the top rate from 8.98 percent to 8.8 percent, and eliminate Iowa’s federal deductibility provision. Iowa is one of five states that allow residents to deduct federal tax payments from their taxable income on their state returns. Hatch argues that this provision makes Iowa’s rates appear artificially high, since most Iowans pay a much lower effective rate. As ITEP has reported, the provision is also costly and regressive, and its elimination would be a huge victory for Iowa progressives. Hatch’s tax reform proposal would cost $615.3 million over two years, which he claims will be offset by the state’s existing budget surplus and future revenue growth.

Branstad, meanwhile, has not made tax policy a centerpiece on his reelection campaign. However, Branstad pushed for and signed into law the largest tax cut in Iowa’s history last year, when the legislature approved a compromise that cut property taxes for businesses, limited residential property tax increases, and expanded a number of individual credits, including the Earned Income Tax Credit (EITC). Critics of the bill point out that while low-income workers gained $35 million in tax relief from the EITC expansion, property owners gained ten times as much. They further charge that the property tax changes will strain local government budgets and hamper the ability of state officials to meet citizens’ needs. The total cost of Branstad’s property tax reform alone is $3.1 billion over ten years, to FY 2024.

Branstad has also backed efforts to enact an optional flat tax system, though he declined to endorse House Speaker Kraig Paulsen’s flat tax proposal during this year’s legislative session, bowing to political realities. Under the proposed plan, Iowans would have the option of paying a 4.5 percent flat tax without deductions (including federal deductibility), rather than using the current income tax schedule. It would overwhelmingly benefit wealthy Iowans and impair the state’s ability to fund crucial services. Opponents fear that Branstad will revive the flat tax if he wins reelection, and that his current wishy-washiness is a front.

On the issue of the gas tax and infrastructure, Hatch wants to raise Iowa’s state fuel tax by 2 cents each year for five years. He also wants to capture 20 percent of the state’s budget surplus (and 20 percent of any future surpluses) for road improvements, bridge repairs, school renovation and construction, and broadband internet infrastructure. Branstad has chosen to remain on the sidelines of the gas tax debate, declining to endorse an increase in the tax but saying he would not veto an increase either.

In a June Quinnipiac poll, Branstad led Hatch 38 percent to 14 percent, but 47 percent of voters remain undecided. The number of undecided voters has increased in recent months, after a spate of bad publicity for Branstad’s administration; it remains to be seen if Hatch can capitalize on the incumbent’s woes and reluctance to take firm policy positions, or if Branstad’s cautious campaign will win the day.

Today the Senate Finance Committee discussed corporate inversions and other problems with the U.S. corporate tax code but showed no signs of bipartisan agreement on a solution. The hearing was held mainly to address the recent wave of corporations making bids to invert, or restructure (on paper) as foreign corporations to avoid U.S. taxes.

While committee chairman Ron Wyden (D-OR) called for immediate action from Congress to prevent corporations from avoiding taxes by inverting, the committee’s ranking Republican, Orrin Hatch, said his support was conditional on several stipulations that probably cannot be met by any reasonable legislation.

The public focus on corporate inversions began in April as the pharmaceutical giant Pfizer made a bid to merge with a smaller foreign company and then call itself a foreign corporation for tax purposes. The drug store chain Walgreens announced that it was considering doing the same. These were followed by the medical device maker Medtronic and the pharmaceutical companies Mylan and AbbVie.

Senator Wyden had previously said that Congress should enact a sweeping comprehensive tax reform that resolves all the problems with our tax code and that also has provisions addressing such inversions, which would be retroactive to May of 2014 to ensure that companies seeking to invert now are not successful in avoiding U.S. taxes. But as the number of corporations seeking inversions increased in recent weeks, Treasury Secretary Jack Lew called for immediate action. Senator Wyden is now calling for temporary legislation to address inversions until Congress can enact comprehensive tax reform.

Such legislation has been introduced in the Senate by Carl Levin (D-MI) and in the House by his brother Sander Levin, the ranking Democrat on the Ways and Means Committee.

During the hearing, Hatch said he could agree to short-term legislation to address inversions, but only if:
—    it is not “punitive,” which he considers the Levin proposal to be,
—    it is not retroactive,
—    it is “revenue-neutral,”
—    it moves the U.S. tax system closer to, rather than farther from, a “territorial” system, which would exempt the offshore profits of our corporations from U.S. taxes.

The Levin legislation that Hatch finds punitive would change the rules so that the newly restructured corporation that results from one of these mergers would be taxed as a U.S. company if it is majority-owned by the same people who owned the original U.S. corporation, or if it’s managed and controlled in the U.S. and has substantial business here. In other words, an American corporation would not be able to use a merger to undertake a “restructuring” that occurs only on paper and then claim to be a foreign company for tax purposes. This seems entirely reasonable and not punitive at all.

As for Hatch’s opposition to any retroactive change in the tax law, waiting even a couple weeks could result in more corporations that merge and claim to be foreign and able to avoid U.S. taxes forever. And a retroactive provision is not particularly burdensome for these corporations, which are on notice that such a change is likely to apply to any deals made from May on and are able to plan accordingly. In fact, Medtronic and other aspiring inverters are actually writing provisions into their merger agreements that allow them to walk away from the deals if Congress changes the rules to deny the tax benefits of inversion.

Finally, Hatch’s call to move towards a “territorial” system misses the problem completely. Hatch and many of the inverting corporations argue that companies are driven to invert because the U.S. taxes the offshore profits of American corporations when they are officially brought to the U.S. (in addition to taxing their domestic profits). Most other countries have a territorial tax system that only taxes the profits earned in that particular country. Hatch and others argue that inverting companies are trying to free their offshore profits from U.S. taxes.

There are many problems with this argument, and the biggest one is that inverting companies are trying to avoid taxes on the profits they earn here in the U.S., not just profits they earn offshore. Several witnesses at the hearing explained that after inverting, corporations typically engage in earnings stripping, which involves loading the U.S. part of the company up with debt that results in interest payments made to a foreign part of the company and interest deductions that wipe out the U.S. income for tax purposes.

For example, the manufacturer Ingersoll-Rand clearly engaged in earnings stripping after it inverted to become a Bermuda company, swiftly shifting from reporting large annual U.S. profits to reporting U.S. losses or very small profits each year along with dramatically larger offshore profits.

Some members of the Finance Committee complained that U.S. corporate tax rate is too high and that a tax reform that lowers the rate is the only answer. But it has been well-documented that the ultimate goal of much corporate tax maneuvering is to make profits appear to be earned in countries with no corporate tax at all like Bermuda, the Cayman Islands, or the British Virgin Islands. So long as loopholes remain that allow this, no reduction in the U.S. corporate tax rate can address this problem.

Comprehensive tax reform is certainly needed, but that cannot become an excuse for Congress doing nothing in the meantime to stop corporate tax avoidance schemes that will be difficult to reverse once they are in place.

The Institute on Taxation and Economic Policy published a report on Monday highlighting a disturbing trend that’s made inroads even in solidly progressive states over the past year: the weakening or complete dismantling of state estate taxes. Three states – Indiana, North Carolina, and Ohio – repealed their estate or inheritance tax in 2013, bringing the total number of states still maintaining their own estate or inheritance tax down to only 19, plus the District of Columbia. Seven other traditionally Democratic states plus D.C. sapped the potency of their tax, either seeing their exemption levels increase in 2013-2014 or passing legislation calling for future increases.

In an era when a dense economic treatise on inequality tops the New York Times bestseller list, developments like these threaten efforts to mitigate a troubling degree of wealth concentration in the United States (the wealthiest 1 percent of American households owned 35.4 percent of the nation’s wealth in 2010) – efforts made all the more important in the realm of regressive state taxation. The estate tax helps to prevent intergenerational transfers from clustering large amounts of wealth in the hands of a few – a phenomenon which has negative implications for equality in the democratic process. States’ recent changes to the tax undermine that purpose and further shift the cost of government onto lower-income taxpayers.

Two of the states (plus D.C.) taking steps to increase their exemption thresholds plan to match the federal per-spouse exemption by 2019 or later, which will top $6 million. Calling this exemption level high by historical standards is a bit of an understatement, and states adopting it effectively exempt many very wealthy households from estate taxation. The five other states raising their exemption thresholds in the past year are moving in the same direction, seeing exemption levels as high as $2 million-$4 million. This means that the overall state tax levy shifts even more toward the low- and middle-income households who already pay a higher share of their income in state taxes. And the fact that predominantly progressive states are making these changes is a step back particularly for places like D.C., which passed smart tax reform this year when it expanded its Earned Income Tax Credit.

Outright repeal in Indiana, North Carolina, and Ohio came on the heels of other ill-advised tax “reforms.” Indiana Governor Mike Pence authorized a sudden repeal of that state’s inheritance tax last year, which had been scheduled to phase out by 2022. ITEP ranked Indiana among the 10 most regressive tax states in last year’s “Who Pays?” report. The elimination of the inheritance tax will compound the fairness issue in a state which recently passed income and corporate tax cuts whose benefits will overwhelmingly accrue to wealthy taxpayers. North Carolina and Ohio similarly passed large income tax cuts last year in addition to their estate tax repeals, with North Carolina also eliminating its Earned Income Tax Credit.

All of these states would do well to heed this simple truth: failing to address large inequities in wealth isn’t good for the democratic process, nor is it good tax policy.

Abbott Labs CEO Miles White is shocked that anyone would see the recent wave of U.S. multinationals seeking to renounce their U.S. citizenship as a tax dodge.

In a July 18 Wall Street Journal op-ed, White suggests that there are no tax benefits to inversion: “Inversion doesn’t change a company’s tax rate. A company pays the same tax rate in the U.S. after inversion as it does before inverting. A company also pays the same tax rates in foreign domiciles before and after inversion,” he wrote.

While it is technically true that inverted companies should continue to pay the 35 percent U.S. tax rate on any U.S. profits, the experience of previous inversions tells us that U.S. tax rates will likely become mostly irrelevant to these companies post-inversion because they will move aggressively to make their U.S. profits appear to be foreign.

For example, the manufacturer Ingersoll-Rand, after inverting to become a Bermuda corporation in 2001, immediately went from reporting annual U.S. profits of hundreds of millions to reporting losses or very small profits each year, while it’s reported profits outside the United States expanded dramatically. This did not reflect any actual loss of U.S. customers or business. Rather, the corporation accomplished this by loaning $3 billion to its U.S. subsidiary, which then deducted the interest payments on the debt to effectively wipe out its U.S. income for tax purposes. It seems likely that this practice, called earnings stripping, would be aggressively used by Walgreens, Medtronic, Mylan, and each of the other large U.S. companies that are currently contemplating an inversion.

It’s sad, but understandable that White would want to make this absurd claim. When Treasury Secretary Jack Lew called for a new “economic patriotism” among Fortune 500 corporations earlier this week, he was tapping into a growing public outrage over offshore corporate tax-dodging. Leading into next week’s U.S. Senate hearing on the ongoing inversion problem, White and other CEO’s are understandably nervous that Congress may take away their new favorite tax-avoidance tools.

But Congress should see White’s claim for what it is: a ruse. Corporate inversions are a brazen effort by large multinationals to avoid paying U.S. taxes. At a time when the nation finds itself with no ability to pay for vital transportation infrastructure, it should be obvious that the billions in tax revenue these companies refuse to pay are billions that must be made up by working families not to mention millions of small businesses that don’t have the luxury of creating a paper headquarters in Ireland.