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A recent analysis by Bloomberg Government revealed that 125 Fortune 500 U.S. multinationals with earnings held offshore spent $230 million lobbying Congress, including on tax issues, in the first six months of 2016.
These and other profitable companies too often claim their tax avoidance strategies are within the boundaries of the law, but they don’t readily reveal how they spend millions lobbying Congress to keep in place or even expand the loopholes that enable rampant tax avoidance.
A recent Citizens for Tax Justice (CTJ) report found that U.S. multinational companies currently hold nearly $2.5 trillion offshore on which they owe up to $718 billion in taxes. Just 10 companies, with $338 billion in offshore earnings among them, spent $59.8 million lobbying Congress in the first half of this year. Google, which holds $58.3 billion offshore, spent the most, $8 million, lobbying lawmakers. Apple and Pfizer, the two companies with the most cash stashed offshore ($408.5 billion), spent $2.25 million and $6.17 million respectively. The available data does not allow the public to determine exactly how much these companies spent specifically lobbying on tax issues, only the total amount spent on lobbying and whether the company spent any time lobbying on tax issues.
As Congress and a new presidential administration consider action on business tax reform next year, there is every reason to believe that companies will ramp up their spending to maintain the status quo or secure loopholes that will allow them to continue shielding profits from U.S. taxes.
A provision that corporations favor and has secured bipartisan support is a temporary discounted tax rate for companies that repatriate their offshore earnings. This is touted as a way to generate short-term revenue to fund infrastructure or other investment. But this essentially would reward bad corporate behavior and incentivize corporations to resume stashing profits offshore after taking advantage of the one-time discounted rate. Rather than allow companies to get a discount, lawmakers should instead require companies to immediately pay the 35 percent rate that they owe on current and future offshore earnings.
Corporations have demonstrated their willingness to spend millions lobbying Congress to get favorable provisions in the tax code. Ordinary working people have no such clout. The nation’s lawmakers should stand up to corporations and pass meaningful tax reform that will create a needed long-term revenue.
Aaron Mendelson, an ITEP intern, contributed to this report.
