Month: April 2016

Tax Justice Digest: Panama Papers — Pfizer — US Ranking

Posted on by tarek
April 8, 2016 01:08 PM
By Kelly Davis, Assistant Director of Communications | | Bookmark and Share

In the Tax Justice Digest we recap the latest reports, posts, and analyses from Citizens for Tax Justice and the Institute on Taxation and Economic Policy.

 This week CTJ and ITEP weighed in on the Panama Papers leak, new U.S. Treasury regulations to combat inversions and Pfizer’s subsequent decision to give up its effort to become Irish and avoid billions in U.S. taxes.  

Tax Dodging Madness
A new CTJ report finds that American corporations are using various tax gimmicks to shift profits earned in the U.S. to subsidiaries located in tax haven countries to avoid paying corporate taxes. In some of these countries the U.S. profits actually exceed the tax haven country’s Gross Domestic Product.

Panama Papers and How the Global Elite Play by a Different Set of Rules
In a CNN commentary, ITEP Director Matt Gardner weighs in on America’s problems with tax avoidance and anonymous shell companies. Read his full piece here. In a separate piece for Quartz, he argues that when heads of state use anonymous shell companies, it’s a “potent symbol of their elite privilege.”

Treasury Regs a Step Forward, But Congress Still Must Act
The Treasury Department’s new regulations strike at the core of one of the main reasons for corporate inversions—avoiding taxes on profit hoards stashed offshore. In a statement and U.S. News and World Report opEd, CTJ director Bob McIntyre lauds Treasury’s action but argues it’s up to Congress to close loopholes that enable rampant corporate tax avoidance. “Unfortunately, the current majority in Congress apparently doesn’t need an excuse to do nothing. It’s up to us voters to rectify that,” he wrote. 

Two New CTJ Reports: Comparing U.S. Taxes With Those of Other Developed Countries
This week CTJ released two new reports that compare how the U.S. ranks in terms of other developed countries when it comes to taxes. Spoiler alert: U.S. corporate taxes as a percentage of the economy are comparatively low, and total U.S. tax receipts as a share of the economy are less than the OECD average.  

The U.S. Is One of the Least Taxed Developed Countries

U.S. Corporate Taxes Are Below Developed Country Average

State News:
Tax justice advocates in Georgia are breathing a sigh of relief after dangerous tax cut proposals fell flat this legislative session. Read ITEP Senior Analyst Dylan Grundman’s full blog post.

State sales taxes are often the source of much contention. Policy analysts of all political stripes agree that a broad sales tax base is best. But the reality is often quite different. Here’s ITEP’s take on the shifting landscape of sales tax bases.

Shareable Tax Analysis:

 

 

 

ICYMI: Tax Day is right around the corner! CTJ is gearing up to release new Tax Day focused data and reports. Be sure to closely follow Citizens for Tax Justice on social media for the latest. (Facebook  and Twitter).

If you have any feedback on the Digest, please email me here: kelly@itep.org

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For frequent updates find us on Twitter (CTJ/ITEP), Facebook (CTJ/ITEP), and at the Tax Justice blog.

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State Rundown 4/8: Show-Me State Rundown

Posted on by tarek
April 8, 2016 10:13 AM
By Sebastian Johnson, State Policy Fellow at ITEP | | Bookmark and Share

Thanks for reading the State Rundown! Here’s a sneak peek: St. Louis, Missouri residents renew earnings tax by a wide margin. Ferguson, Missouri, voters reject property tax increase to fund police reform but approve sales tax increase. Mississippi House passes scaled-down tax cut package. Ohio Gov. John Kasich promises another tax-cut package next year.

— Carl Davis, ITEP Research Director

Despite a big-money campaign by a local billionaire to derail the measure, voters in St. Louis, Missouri renewed their local earnings tax by a wide margin. The 1 percent income tax applies to the income of those who live or work in St. Louis. According to unofficial election results, 72 percent of city voters wanted to keep the tax, which they must reapprove every five years. Supporters of the tax said its elimination would have created a big budget shortfall for the city. Opponents in the state legislature have introduced a bill that would repeal the tax.

Meanwhile, voters in Ferguson, Missouri, rejected a property tax increase that city officials say is needed to fund police reform efforts. The tax proposal, which appeared on the ballot as Proposition P, would have increased the property tax levied by 40 cents per $100 of assessed value. It required a two-thirds majority to pass but received just 57 percent of the vote. If approved, Proposition P would have generated $600,000 in new revenue. Voters in Ferguson did approve a sales tax increase, which requires only a simple majority to pass and received 69 percent of the vote. That measure is expected to raise $1.225 million in new revenue annually. The municipality came under scrutiny from the U.S. Justice Department after the killing of teenager Michael Brown by city police officers in 2014.

The Mississippi House passed an income tax cut package this week, though the measure is much smaller than that sought by the Senate. The chamber approved $143 million in personal income tax cuts and raised the threshold for state income tax liability to $5,000 of taxable income. The state Senate, led by Lt. Gov. Tate Reeves, originally sought a $575 million package of corporate franchise, income and self-employment tax cuts. House Speaker Phil Gunn, who supported the scaled-down cuts, would have preferred to pair the cuts with increased revenue for roads and infrastructure spending. There is still a possibility that legislators will consider revenue increases for that purpose.

Ohio Gov. John Kasich delivered his State of the State speech this week, promising to propose another package of income tax cuts early next year. Since 2011 Ohio has cut taxes by more that $5 billion, including elimination of the estate tax and personal income tax rate reductions of 16 percent. Opponents of the governor’s cuts argue that local jurisdictions bear the brunt, seeing $1.7 billion less in aid from the state.

If you like what you are seeing in the Rundown (or even if you don’t) please send any feedback or tips for future posts to Sebastian Johnson at sdpjohnson@itep.org. Click here to sign up to receive the Rundown via email.

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American Corporations Tell IRS the Majority of Their Offshore Profits Are in 10 Tax Havens

Posted on by Alex Welch

April 7, 2016 05:42 PM | | Bookmark and Share

Read this report in PDF.

Recent revelations that a Panamanian law firm helped set up more than 200,000 offshore shell corporations has heightened awareness of the vast amount of income and wealth flowing into tax and secrecy havens worldwide. The countries through which this firm helped funnel the global elites’ assets also act as tax havens for multinational corporations. Recently released data from the Internal Revenue Service show that U.S. corporations claim that 59 percent of their foreign subsidiaries’ pretax worldwide income is being earned in ten tiny tax havens.

The table below shows how much profit American corporations collectively tell the IRS that their subsidiaries have earned in each foreign country. Amazingly, American corporations reported to the IRS that the profits their subsidiaries earned in 2012 (the latest year for which data are available) in Bermuda, the Cayman Islands, the Bahamas and Luxembourg were greater than the entire gross domestic product (GDP) of those nations in that year. For example, in Bermuda, U.S. corporations claimed they earned more than $18 for each $1 of actual GDP.

It is obviously impossible for American corporations to earn profits in a given country that exceed that country’s total output of goods and services. Clearly, American corporations are using various tax gimmicks to shift profits earned in the U.S. and other countries where they do the bulk of their business into their subsidiaries in these tiny countries that impose little or no tax on corporate profits.

Besides the aforementioned, the data indicate that other countries also serve as tax havens for American multinational corporations. For example, American corporations report to the IRS that the profits their subsidiaries earned in Switzerland were equal to 7 percent of Switzerland’s GDP. This is a much higher share of GDP than the profits reported in more significant European countries: about half a percent of GDP in Germany and France, and 2.9 percent in the United Kingdom. This suggests that American corporations are exaggerating how much of their profits are earned in Switzerland, which is not surprising given that some corporations are able to obtain very low tax rates in that country.

The 10 countries with the highest reported American offshore corporate profits as a percentage of their GDP in 2012 had only 4 percent of the total GDP for all the foreign countries included in the IRS figures. But American corporations reported to the IRS that 59 percent of their offshore subsidiary profits were earned in these tax-haven countries. This is impossible. The only plausible conclusion is that American corporations are engaging in various accounting gimmicks to make large amounts of their profits appear, for tax purposes, to be earned in these 10 tax-haven countries. 

These 10 countries have either zero tax rates or provide loopholes that allow corporate profits to go largely untaxed in many circumstances. The two columns on the right side of the table on page one show the amount of corporate income taxes paid on the subsidiary profits to the country where they were supposedly earned or any other foreign country. This is shown first as a dollar figure and then as a percentage of the profits supposedly earned in that country.

There are apparently foreign income taxes paid on some profits even in countries known to have a zero corporate tax rate like Bermuda or the Cayman Islands. This may often occur because the profits are shifted from a subsidiary in another foreign country that imposes some tax on profits when they are shifted to a tax haven country. Overall, however, these subsidiary corporations are able to largely avoid paying any tax. The effective rate of foreign taxes paid on subsidiary profits in the ten countries was only 8 percent.

The U.S. allows its corporations to defer paying U.S. corporate income taxes on profits of their offshore subsidiaries until those profits are officially “repatriated” (officially brought to the U.S.). This creates an incentive for American corporations to engage in accounting gimmicks to make their U.S. profits appear to be earned in countries where they will not be taxed. These data demonstrate that this is happening on a large scale. In fact, American corporations reported that more than half a trillion dollars of their profits were earned, for tax purposes, in the 10 tax haven countries shown in the table.

Amazingly, some lawmakers have, in recent years, called for even greater tax breaks for the offshore profits of American corporations. Some proposals would largely exempt previously accumulated offshore profits from U.S. taxes on an (allegedly) one-time basis (often called a “repatriation holiday”). Others would provide a permanent exemption (often called a “territorial tax system”). Perhaps these lawmakers do not realize that over half of the profits that American corporations claim their subsidiaries earn offshore — over half of the profits that could benefit from such new tax breaks — are reported by the companies to have been earned in 10 obvious tax havens.

Corporate profits that are genuinely earned through real business activities abroad are typically subject to taxes in the countries where they are earned, and if they are repatriated, the U.S. tax that is due is reduced by whatever amount of tax was paid to foreign governments. For this reason, the only offshore profits that are potentially subject to nearly the full 35 percent U.S. tax rate upon repatriation are those artificially shifted to tax havens. Companies engaging in these tax-avoidance games would therefore be the main beneficiaries of a repatriation holiday or territorial system.

Congress could end this corporate tax avoidance in a straightforward way by ending the rule allowing American corporations to defer paying U.S. taxes on their offshore subsidiary profits. They would still be allowed to reduce their U.S. income tax bill by whatever amount of tax was paid to foreign governments, in order to avoid double-taxation. But there would no longer be any reason to artificially shift profits into tax havens because all profits of American corporations, whether earned in the U.S. or in any other country, would be taxed at least at the U.S. corporate tax rate in the year they are earned.   


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Sorry, David Cameron-“private” offshore holdings are indeed a matter of public interest

Posted on by tarek
April 7, 2016 01:23 PM
By Matt Gardner, Senior Fellow at ITEP | | Bookmark and Share

“Political casualties are mounting fast in the wake of the Panama Papers—a historic leak of confidential documents from a Panama-based law firm that revealed connections between a number of world leaders and nearly 215,000 offshore shell companies.

The prime minister of Iceland has said that he plans to step aside “for an undetermined amount of time” after the Panama Papers revealed that his family owns previously-undisclosed offshore investments. The leak also implicated high-ranking current or former elected officials in countries including Russia, Argentina, Ukraine, Libya and Syria. Even David Cameron, the United Kingdom prime minister who has strongly condemned tax evasion, is facing scrutiny over a shell corporation set up by his late father.”

Read the Full Article at Quartz.

 

 

 

Obama Wins One Against Corporate Tax Dodging

Posted on by tarek
April 7, 2016 12:59 PM
By Bob McIntyre, Director of Citizens for Tax Justice | | Bookmark and Share

Almost 70 years ago, Circuit Judge Learned Hand established an important tax principle. To paraphrase the judge, nobody has to pay more in taxes than the law requires, but would-be tax avoiders cannot make stuff up.
Unfortunately, over the years, making stuff up has become the stock in trade of lawyers for U.S.-based multinational corporations, and they too often get away with it thanks to our lax corporate tax laws and their weak enforcement.
But this week after swift action by the Obama administration, Pfizer Inc. abruptly reversed course on its planned corporate inversion, or made up move to Ireland, which would have allowed the pharmaceutical manufacturer to dodge taxes on $194 billion in offshore profits.
The Treasury Department’s new regulations strike the core of one of the main reasons corporations (and likely Pfizer) invert: avoiding taxes on profits stockpiled offshore.
Pfizer’s about-face, and the Treasury action that led to it, is a major victory for average American taxpayers, who would have been left holding the bag for the big hole in the federal budget that the inversion craze threatened to produce. It’s also a triumph for common sense.
Inversions are a particularly egregious exploitation of our loophole-ridden corporate tax code. Pfizer, for example, had no real plans to move to Ireland. In fact, in a press release announcing the inversion and merger with Allergan, Pfizer wrote that “the combined company is expected to maintain Allergan’s Irish legal domicile (but) Pfizer plc will have its global operational headquarters in New York.” In other words, New York-based Pfizer planned on continuing business as usual in the United States and retaining all the benefits of operating on U.S. soil without paying much in U.S. taxes.
Like most multinationals, Pfizer and its corporate lobbyists continually complain that U.S. taxes are too high, claims that are parroted by its elected allies on Capitol Hill. The truth is that big, profitable U.S. corporations actually pay an average effective tax rate of only 19 percent, which is on par with or lower than corporate tax rates in most other developed countries. The current inversion craze has helped exposed how multinational corporations relentlessly seek to achieve a U.S. tax rate of close to zero by shifting their profits on paper to tax haven countries like Ireland, the Cayman Islands or Bermuda.
Our elected officials can and should work to prevent these elaborate tax dodging schemes. A decade ago after a wave of corporate inversions, an appalled Congress, on a bipartisan basis, quickly passed a law that attempted to ban them. That law turned out to be inefficient, but our current Congress has refused to fix it, even as inversions have gone viral. This is why the Treasury Department’s latest action was necessary.
Clearly, President Barack Obama is committed to doing what he can to end tax-motivated expatriations. But this doesn’t guarantee a happy ending to this story. Already Allergan, Pfizer’s erstwhile partner in crime, is seeking a new inversion partner, and lawyers for other U.S. corporations are almost certainly searching for ways around the latest Treasury regulations.
There is no excuse for Congress not to act to protect U.S. taxpayers and ensure that multinational companies like Pfizer pay their fair share in taxes. Lawmakers have a number of sensible legislative options to do so, including the Stop Corporate Inversions Act, the Pay What You Owe Before You Go Act and the Corporate Fair Share Tax Act.
Unfortunately, the current majority in Congress apparently doesn’t need an excuse to do nothing. It’s up to us voters to rectify that.

“Almost 70 years ago, Circuit Judge Learned Hand established an important tax principle. To paraphrase the judge, nobody has to pay more in taxes than the law requires, but would-be tax avoiders cannot make stuff up.

Unfortunately, over the years, making stuff up has become the stock in trade of lawyers for U.S.-based multinational corporations, and they too often get away with it thanks to our lax corporate tax laws and their weak enforcement.”

Read the Full Article in US News and World Report

 

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U.S. Corporate Taxes Are Below Developed Country Average

Posted on by Alex Welch

April 7, 2016 12:21 PM | | Bookmark and Share

Read this in PDF.

Corporate income taxes in the United States as a share of the economy are significantly less than the average among developed nations, according to an analysis of the most recent data from the Organization for Economic Cooperation and Development (OECD). Data from the Treasury Department show that U.S. corporate taxes as a percentage of GDP are 2.3 percent, which is 15 percent less than the 2.7 percent weighted average among the other 32 OECD countries for which data are available. [1]U.S. corporate income taxes have declined sharply as a percentage of GDP since 1945. [2]  Part of the reason corporations are paying less in taxes today than they did 70 years ago is due to copious changes in the tax code. Yet there is a growing and vocal movement among well-financed lobbying groups to push federal lawmakers to lower the corporate tax rate. These business-backed groups claim that the U.S. corporate tax rate is too high, citing the 35 percent federal statutory tax rate. But that narrow argument ignores critical facts such as the many large tax breaks, loopholes and other corporate tax exceptions that big businesses have successfully lobbied to embed in the tax code. A 2014 study by Citizens for Tax Justice examined five years of data and found that Fortune 500 companies paid an average federal effective corporate income tax rate of only 19.4 percent, which is just over half of the nominal U.S. statutory rate of 35 percent. That same study found that many profitable, large U.S. corporations such as Boeing, General Electric and Verizon paid no federal corporate income taxes at all.  [3]Rather than cutting the rate as many lawmakers are proposing, a better approach to corporate tax reform would be to eliminate the tax breaks and loopholes that allow many companies to get away with not paying their fair share. This approach would not only make the tax system more fair, but it would also help ensure that we have enough resources for critical investments in infrastructure, transportation, education, health, public and food safety, all of which benefit the public and corporations alike. [1] OECD continues to use Bureau of Economic Analysis (BEA) estimates of corporate tax payments, while we use actual collections as reported by the U.S. Treasury in its “Monthly Treasury Statements” of federal tax collections and by the U.S. Census Bureau for state & local corporate income taxes (“U.S. Census Bureau, Quarterly Summary of State and Local Government Tax Revenue, Table 1. National totals of state and local government tax revenue, by type of tax”). Previously, OECD’s approach hugely overstated US corporate taxes for several reasons. OECD has corrected most of its errors, but not all. The biggest remaining difference between OECD’s figures and actual U.S. corporate tax collections is that OECD appears to include “Taxes paid by domestic corporations to foreign governments on income earned abroad” as corporate taxes paid to US governments.[2] Office of Management and Budget, “The Budget for Fiscal Year 2017, Historical Tables,” Table 2.3, https://www.whitehouse.gov/sites/default/files/omb/budget/fy2017/assets/hist.pdf [3] Citizens for Tax Justice, “The Sorry State of Corporate Taxes,” February 2014. http://www.ctj.org/corporatetaxdodgers/

Corporate income taxes in the United States as a share of the economy are significantly less than the average among developed nations, according to an analysis of the most recent data from the Organization for Economic Cooperation and Development (OECD). Data from the Treasury Department show that U.S. corporate taxes as a percentage of GDP are 2.3 percent, which is 15 percent less than the 2.7 percent weighted average among the other 32 OECD countries for which data are available. [1]

U.S. corporate income taxes have declined sharply as a percentage of GDP since 1945. [2]  Part of the reason corporations are paying less in taxes today than they did 70 years ago is due to copious changes in the tax code. Yet there is a growing and vocal movement among well-financed lobbying groups to push federal lawmakers to lower the corporate tax rate. These business-backed groups claim that the U.S. corporate tax rate is too high, citing the 35 percent federal statutory tax rate. But that narrow argument ignores critical facts such as the many large tax breaks, loopholes and other corporate tax exceptions that big businesses have successfully lobbied to embed in the tax code. A 2014 study by Citizens for Tax Justice examined five years of data and found that Fortune 500 companies paid an average federal effective corporate income tax rate of only 19.4 percent, which is just over half of the nominal U.S. statutory rate of 35 percent. That same study found that many profitable, large U.S. corporations such as Boeing, General Electric and Verizon paid no federal corporate income taxes at all. [3]

Rather than cutting the rate as many lawmakers are proposing, a better approach to corporate tax reform would be to eliminate the tax breaks and loopholes that allow many companies to get away with not paying their fair share. This approach would not only make the tax system more fair, but it would also help ensure that we have enough resources for critical investments in infrastructure, transportation, education, health, public and food safety, all of which benefit the public and corporations alike. 

 

[1] OECD continues to use Bureau of Economic Analysis (BEA) estimates of corporate tax payments, while we use actual collections as reported by the U.S. Treasury in its “Monthly Treasury Statements” of federal tax collections and by the U.S. Census Bureau for state & local corporate income taxes (“U.S. Census Bureau, Quarterly Summary of State and Local Government Tax Revenue, Table 1. National totals of state and local government tax revenue, by type of tax”). Previously, OECD’s approach hugely overstated US corporate taxes for several reasons. OECD has corrected most of its errors, but not all. The biggest remaining difference between OECD’s figures and actual U.S. corporate tax collections is that OECD appears to include “Taxes paid by domestic corporations to foreign governments on income earned abroad” as corporate taxes paid to US governments.

[2] Office of Management and Budget, “The Budget for Fiscal Year 2017, Historical Tables,” Table 2.3, https://www.whitehouse.gov/sites/default/files/omb/budget/fy2017/assets/hist.pdf 

[3] Citizens for Tax Justice, “The Sorry State of Corporate Taxes,” February 2014. http://www.ctj.org/corporatetaxdodgers/


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The U.S. Is One of the Least Taxed Developed Countries

Posted on by Alex Welch

April 7, 2016 11:41 AM | | Bookmark and Share

Read this in PDF.

The most recent data from the Organization for Economic Cooperation and Development (OECD) show that the United States is one of the least taxed developed nations. 

A tally of all taxes collected at the federal, state and local levels reveals based on 2014 U.S. Treasury data reveal that the United States had the fourth lowest level of total taxes — 25.7 percent of gross domestic product (GDP) — among the 34 OECD countries. Only Mexico, Chile and Korea collected less in taxes as a percent of GDP. The level of taxation in the United States is well below the 34.7 percent OECD weighted average. [1]

These facts offer important context at a time when many presidential candidates and members Congress insist that U.S. taxes are too high and the path to economic prosperity is tax cuts. 

This assertion has no basis in sound research and more federal tax cuts could, in fact, set the nation on an irresponsible fiscal path. Already, years of relatively low taxes have increased the national debt and forced draconian spending cuts. The nation’s current relatively low level of taxes leaves us unable to raise enough revenue to adequately fund education, infrastructure and healthcare and other priorities that are crucial to long-term economic growth and competitiveness. It is not a badge of honor that the United States is one of the least taxed developed countries. The OECD data demonstrate that even if lawmakers implemented necessary corporate and individual tax reforms that allowed the nation to collect more revenue in a progressive, fair way, the United States would still remain one of the lowest taxed nations in the developed world. 

View video based on the report’s findings: 

[1] OECD continues to use Bureau of Economic Analysis (BEA) estimates of corporate tax payments, while we use actual collections as reported by the U.S. Treasury in its “Monthly Treasury Statements” of federal tax collections and by the U.S. Census Bureau for state & local corporate income taxes (“U.S. Census Bureau, Quarterly Summary of State and Local Government Tax Revenue, Table 1. National totals of state and local government tax revenue, by type of tax”). Previously, OECD’s approach hugely overstated US corporate taxes for several reasons. OECD has corrected most of its errors, but not all. The biggest remaining difference between OECD’s figures and actual U.S. corporate tax collections is that OECD appears to include “Taxes paid by domestic corporations to foreign governments on income earned abroad” as corporate taxes paid to US governments.


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News Release: Pfizer Inversion Failure Is an Example of What Happens When Elected Officials Stand up to Special Interests

Posted on by Alex Welch

April 6, 2016 11:45 AM | | Bookmark and Share

For Immediate Release: Wednesday, April 6, 2016
Contact: Jenice R. Robinson, 202.299.1066 x 29, Jenice@ctj.org

Pfizer Inversion Failure Is an Example of What Happens
When Elected Officials Stand up to Special Interests

Following is a statement by Robert McIntyre, director of Citizens for Tax Justice, regarding Pfizer Corp.’s announcement that it will no longer seek to merge with Ireland-based Allergan, a move that for months has been widely derided as a scheme to avoid billions in U.S. taxes.

“Less than 30 hours after the Obama Administration announced regulations that put a damper on corporations’ incentives for “inverting” or claiming foreign citizenship, Pfizer’s board voted to abandon its planned merger with Ireland-based Allergan.

 “The Obama Administration’s actions stopped Pfizer’s tax-dodging scheme in its tracks, at least for now, and demonstrate that our elected officials can and should put the needs of ordinary taxpayers above the will of corporate special interests and their wealthy allies.

 “Pfizer officials claimed that their planned merger with Allergan and ostensible move to Ireland, a known tax haven, was purely a business decision that would benefit consumers as well as shareholders. But the truth is that only Pfizer executives and shareholders stood to financially and handsomely benefit from the inversion if the company could avoid paying taxes on the $200 billion in profits it has stashed offshore.

 “The administration’s actions, while good and necessary, are a partial solution. Only Congress has the power to pass laws that will permanently close the egregious loopholes in our tax code that make it financially beneficial for bad corporate citizens to renounce their citizenship. Americans should send people to Congress who are willing to do so.”  

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Panama Papers and America’s Problem

Posted on by tarek
April 5, 2016 02:27 PM
By Matt Gardner, Senior Fellow at ITEP | | Bookmark and Share

“Anonymous shell corporations and secret bank accounts are vital resources for those engaged in tax evasion and money laundering. But this web of secrecy has started to crumble in recent years due in part to revelations from whistle-blowers embedded in this complex web of tax havens and fake corporations.

The latest leak to the International Consortium of Investigative Journalists (ICIJ), dubbed the Panama Papers, reveals that a single law firm, Mossack Fonseca, facilitated the creation of more than 200,000 offshore entities.”

Read the Full Article at CNN.com

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News Release: New Treasury Regulations Are Good, But Not Sufficient to Stop Inversions

Posted on by Alex Welch

April 5, 2016 11:42 AM | | Bookmark and Share

For Immediate Release: Tuesday, April 5, 2016
Contact: Jenice R. Robinson, 202.299.1066 X29, Jenice@ctj.org

New Treasury Regulations Are Critical, But Not Sufficient to Stop Inversions

Following is a statement by Robert S. McIntyre, director of Citizens for Tax Justice, regarding the Treasury Department’s proposed new regulations to curb tax avoidance by U.S. corporations that pretend to become foreign companies for tax purposes.

“There is growing public outrage over lax tax laws that allow American corporations to avoid paying U.S. taxes by claiming foreign citizenship. These new regulations partly address that by reducing the tax payoff from a convoluted transaction known as “earnings stripping.” While the regulations may not stop the pending Pfizer inversion, they may put a damper on the company’s assumed plans to avoid taxes on $40 billion in untaxed profits that it has shifted into tax havens.

“But the Treasury Department can and should take further action. For example, it should use its authority to further limit the ability of expatriating companies to use “hopscotch loans” to get around the current, weak curbs on inversions.

“Even if Treasury further cracks down on U.S. companies that claim foreign residency for tax purposes, congressional action remains necessary to put a full stop to corporation inversions. Congressional leaders should stop coddling corporate deserters and enact anti-inversion reforms such as the Stop Corporate Inversions Act.”

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