Guest Column – “Shared Sacrifice” should include closing international tax loopholes
By Congressman Lloyd Doggett
As Washington considers solutions to our debt crisis, I believe a fundamental principle -before anyone considers cutting Medicare or raising tax rates- must be to be sure that everyone is playing by the same rules and contributing to the cost of our national security. Why should any retail store in Lockhart or for that matter the person, who serv
es you barbeque today be paying a higher rate of taxes than some multinational corporation that can duck and dodge its obligations by moving money to Bermuda or the Cayman Islands? Closing loopholes that allow billions in tax dollars to slip through the cracks each year would restore much-needed revenue, and would also help our economic growth by leveling the playing field for small business and improving public confidence in our tax system.
In particular, the widespread use of international tax games in offshore tax havens costs the U.S. Treasury an estimated $100 billion each year in lost tax revenues. Our failure to close these tax loopholes means that America is borrowing more from the Chinese, the Saudis, and other foreign creditors and looking to hardworking families and small businesses to pick up the slack. Equally important, international corporate tax loopholes provide incentives to invest abroad instead of at home, shipping jobs offshore and harming our local communities. The Stop Tax Haven Abuse Act that I have authored takes aim at these abuses. This bill will stop some of the most egregious offshore shenanigans and provide powerful new tools to combat tax abuses and reduce the incentives to send U.S. jobs and money offshore. These are the type of abuses about which Leslie Stahl interviewed me earlier this year on 60 Minutes.
With this economy still precarious, what better source for needed tax revenue than those giant enterprises that are shifting jobs abroad to avoid paying taxes at home? America needs the revenue and American firms who play by the rules deserve a level field. Unfortunately, while most of America understands this self-evident proposition, there are still many, aided by well-paid lobbyists, who are pushing in the opposite direction. Among the giveaways they advocate is a so-called “corporate repatriation tax holiday” that would reward multinational corporations for stashing billions in tax havens by allowing them to bring back their hidden foreign earnings at a mere 5.25 percent tax rate. What a deal, except that it means someone else must pay for what these giants do not. While billed as a job creation measure, prior attempts in 2004 amounted to a massive windfall for a few multinationals and their shareholders, while doing nothing to create jobs or stimulate the economy. Even worse, this corporate tax holiday encourages corporations to shift even more jobs and profits overseas hoping for the next tax giveaway. Remarkably, the proponents’ audacity is not limited to a temporary tax holiday; some would go even further, pushing for a permanent tax exemption on foreign profits. It is not difficult to see how a system that lets investment overseas completely escape U.S. taxes is a recipe for job creation abroad and more layoffs at home.
We hear a lot these days about shared sacrifice, but usually from people who expect the most from those that have the least. Before we ask for greater sacrifice from hard-working families and small businesses, we should first ask these multinational corporations to sacrifice their international tax loopholes and we should refuse to open new ones. Providing a level playing field and expecting everyone to pay their fair share should be the foundation of our tax system, and closing these tax loopholes-through legislation like the Stop Tax Haven Abuse Act-should be a critical element of any deficit reduction package.