For the last year, we've seen Congress sit on their hands when it comes to moving legislation that would benefit ordinary people--legislation such as transportation funding or emergency unemployment benefits. Yet it seems the lame-duck 113th Congress is fine with its swan song being a controversial package of deficit-financed tax breaks that primarily benefit businesses.
In Spite of Treasury's New Regulations, Corporate Inversion Crisis Will Continue Without Congressional Action
The recent surge in corporate inversions -- American corporations using mergers to pretend that they are foreign companies for tax purposes -- has been curbed but not stopped by the Obama Administration. The Illinois-based pharmaceutical company AbbVie called off its planned acquisition of Shire to invert to the United Kingdom. But another corporation, Ohio-based Steris, announced this week it plans to acquire U.K.-based Synergy Health for that very purpose.
CTJ statement: "American corporations will find ways to make their U.S. profits appear to be earned in these tax havens until Congress enacts a tax reform that finally puts an end to this nonsense."
"The Treasury Department's new rules will make it harder for corporations to get away with claiming they are foreign to avoid taxes, but only congressional action can stop it in its tracks."
State-by-State Estate Tax Figures Show Why Congress Should Enact Senator Sanders' Responsible Estate Tax Act
New data from the IRS show that only 0.1 percent -- just one-tenth of one percent -- of deaths in the U.S. in 2011 resulted in federal estate tax liability in 2012. (Estate taxes are usually filed the year after a person dies.) To restore some of the revenue lost when the estate tax was scaled back in recent years, Congress should enact a proposal from Senator Bernie Sanders that would restore exemption amounts in effect in 2009, but would subject the largest estates to higher rates.
The federal Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) are among the most important anti-poverty programs in America. This fact sheet examines two types of families living below the official poverty line -- those with one parent and two children and those with two parents and three children -- and the impact that the EITC and CTC has on them. It also demonstrates that a significant amount of this impact comes from an expansion in both credits, which was first enacted in 2009 and will expire at the end of 2017 if Congress does not act.
Individuals and corporations are both allowed to defer paying U.S. taxes on key parts of their income. Under current law, wealthy individuals are required to give up this benefit when they renounce their American citizenship, while profitable corporations are not. Changing this policy is key to preventing corporate inversions.
Several proposals have been offered to address the crisis of American corporations "inverting." These companies reincorporate as offshore companies to avoid U.S. taxes even as they continue to operate and be managed in the U.S. and benefit from the public investments that American taxpayers support. This report describes these proposals and explains why some are much stronger and more effective than others.
Statement: Despite Walgreens' Decision, Emergency Action Is Still Needed to Stop Corporate Inversions
Following is a statement by Robert McIntyre, director of Citizens for Tax Justice, regarding emerging reports that Walgreen Co. will announce Wednesday that, although it still plans to buy Switzerland-based Alliance Boots, it will not use legal maneuvers to reincorporate as a Swiss company to avoid U.S. taxes.
House Republicans have proposed to let an expansion of the child tax credit for low-income working families expire after 2017. Under their plan, the money that had previously gone to children in low-income families would in effect be used to fund bigger child tax credits for better-off families. These national and state-by-state figures illustrate how the benefits of the President's proposal would mostly help families with incomes under $40,000 while the House Republican proposal would mostly help those with incomes above $100,000.
On July 14, Citizens for Tax Justice sent a letter to members of the House of Representatives asking them to vote against the so called "Permanent Internet Tax Freedom Act," which would make permanent law banning state governments from taxing internet access the same way they tax other comparable services.
America is undertaxed, and the result is underfunding of public investments that would improve our economy and the overall welfare of Americans. Fortunately, Congress has several straightforward policy options to raise revenue, mostly by closing or limiting loopholes and special subsidies imbedded in the tax code that benefit wealthy individuals and profitable businesses.
The billionaire brothers Charles and David Koch are in the news once again as they step up their efforts to influence elections and the political process with a new super PAC called Freedom Partners Action Fund. It's worth thinking about how tax policy could be affected if they succeed.
This study examines the use of tax havens by Fortune 500 companies in 2013. It reveals that tax haven use is ubiquitous among America's largest companies, but a narrow set of companies benefit disproportionately.
A few days after Americans filed their tax returns last month, the Internal Revenue Service released data on the offshore subsidiaries of U.S. corporations. The data demonstrate, in an indirect way, that these companies are not playing by the same rules as the rest of us.
American Fortune 500 corporations are likely saving about $550 billion by holding nearly $2 trillion of "permanently reinvested" profits offshore. Twenty-eight of these corporations reveal that they have paid an income tax rate of 10 percent or less to the governments of the countries where these profits are officially held, indicating that most of these profits are likely in offshore tax havens.
The Senate is likely to approve a bill often called the "tax extenders" because it would extend dozens of tax breaks, mostly benefiting corporations and other businesses, for two years. This bill would increase the deficit by $85 billion over the coming decade, but the number everyone should be concerned with is much bigger -- over $700 billion. That's the increase in the deficit that would result if Congress stays on its current course of extending these tax breaks every two years over the coming decade. The Senate has given every indication that this is the direction it's headed in.
Corporate "inversion," in which an American corporation reincorporates itself as a "foreign" company to avoid U.S. taxes, is in the news again. In 2004, Congress enacted a bipartisan law to prevent inversions, but a gaping loophole allows corporations to skirt this law by acquiring a foreign company. This is what the pharmaceutical giant Pfizer hopes to do if its bid to acquire AstraZeneca, a U.K. company, is successful. A group of hedge funds that own stock in Walgreen Co. want the company to acquire a larger stake in Switzerland-based Alliance Boots for the same reason.
Congress Should Halt Plans to Permanently Embed Budget-Busting, Faulty Research Credit in the Tax Code
Research, innovation, inventiveness -- these are the words we associate with cutting edge businesses and good paying jobs that won't disappear any time soon. But when you involve members of Congress who want to use the tax code to encourage "research," everything goes wrong.
Five things you should know about America's tax system and how it can be reformed.