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Sens. Rob Portman (R-Ohio) and Chuck Schumer (D-NY) today released a long-awaited tax reform plan that reads like a wish list for multinational corporations. 

The Senate Finance Committee working group’s report provides recommendations for restructuring the federal government’s international corporation tax rules. The plan is long on misguided ideas and short on specifics. The heart of the plan is a proposal to move to a territorial tax system in which all corporate income reported in countries other than the United States–including notorious tax havens such as Bermuda and the Cayman Islands–would be exempt from U.S. corporate income taxes.

As Citizens for Tax Justice has noted, such a system would dramatically increase the incentive for U.S. multinational corporations to use accounting maneuvers and paperwork to shift their profits from the United States to offshore tax havens. At a time when corporations have accumulated more than $2.1 trillion in offshore holdings, much of which may be U.S. profits that are reported as “earned” in zero-tax jurisdictions such as the Cayman Islands, the first step toward corporate tax reform should be removing incentives to offshore profits, not providing even more.

European countries that have some form of a territorial tax system have found it impossible to halt the use of offshore tax havens, so it seems likely that a U.S. territorial system would be equally leaky. Yet the framework claims the new plan would supposedly make it harder for corporations to engage in offshore shenanigans.

Further, under the Portman-Schumer blueprint, chronic tax avoiders such as Apple, Microsoft and GE will have new ways to avoid taxes. Another feature of the plan is a “patent box” regime that gives companies a special low tax rate on profits generated from legal monopolies, such as copyrights and patents. As CTJ has explained, patent boxes give companies tax breaks that are, at best, linked only to research that has long since been completed, and at worst lets companies game the system by pretending that most or all of their income is related to intellectual property.

One member of the Senate working group, noted with approval that the plan represents “the first step toward the kind of ‘win-win’ situations that are all too rare in this town.”

The plan gives big multinationals new avenues for tax avoidance whether they report their income in the U.S. or shift profits to tax havens, which is truly a “win-win” for corporations seeking to avoid paying their fair share. But the broad outlines of the Finance Committee’s recommendations make it clear that the plan would be a big loss for the rest of us.