In full transparency, the following is a media release from Sen. Ed Markey, who was elected by voters in the Commonwealth of Massachusetts to serve the state in Washington DC in the US Senate. He is a Democrat. (file photo) SOURCE publishes press release from elected leaders as a community service.
WASHINGTON DC – After three weeks of the Treasury Department undertaking “extraordinary measures” to uphold the full faith and credit of the United States, Senator Markey joined Senator Sheldon Whitehouse (D-R.I.), chair of the Senate Budget Committee, and Congressman Lloyd Doggett (D-TX) in introducing the No Tax Breaks for Outsourcing Act.
Were it not for the Trump tax law, the U.S. would not have hit the debt limit so soon. By ending the Trump law’s incentives for jobs and profits overseas, this bill would join the European Union, United Kingdom, and South Korea in moving to implement the Organization for Economic Cooperation and Development (OECD) global minimum tax agreement and stop the race to the bottom on corporate taxation. The bill would level the playing field for American workers and small businesses by making sure multinational corporations pay the same tax rate on profits earned abroad as they do in the United States.
“If Republicans hadn’t passed the Trump tax giveaway to benefit their wealthy campaign donors, we wouldn’t even be hitting the debt ceiling right now,” said Senator Whitehouse, Chairman of the Senate Budget Committee. “We have got to end the deficit-ballooning incentives the former president created for sending American jobs and profits overseas. Working people pay their fair share in taxes – multinational corporations can do the same.”
“By ending Trump-GOP tax breaks, which encourage multinational corporations to both outsource good-paying American jobs and shift profits abroad, we can raise revenue, bring back American jobs, and make tax laws more fair for all,” said Congressman Doggett. “Let’s add more jobs here in America and insist that profits earned from American consumers are taxed in America, not hidden in offshore tax havens. The No Tax Breaks for Outsourcing Act could recover hundreds of billions of dollars in corporate taxes rightly owed on those profits, which could be invested to promote even more economic growth here in the USA. Avoiding a debt limit crisis is not just about spending levels but also about closing the tax loopholes that have contributed so much to our deficits.”
The legislation is cosponsored by Senators Richard Durbin (D-Ill.), Chris Van Hollen (D-Md.), Elizabeth Warren (D-Mass.), Jack Reed (D-R.I.), Martin Heinrich (D-N.M.), Chris Murphy (D-Conn.), Richard Blumenthal (D-Conn.), Tammy Baldwin (D-Wis.), Jeff Merkley (D-Ore.), Bob Casey (D-Pa.), Tammy Duckworth (D-Ill.), Mazie Hirono (D-Hawaii), Cory Booker (D-N.J.), and Brian Schatz (D-Hawaii).
In 2021, Secretary Yellen led 130 countries in a historic agreement to ensure multinational corporations begin to pay a fair share of tax wherever they operate through a Global Minimum Tax. The No Tax Breaks for Outsourcing Act would implement this agreement by requiring American multinationals to pay the same tax rate on profits earned abroad as they do in the United States. It would apply this tax on foreign profits on a country-by-country basis to prevent companies from dodging taxes by setting up webs of subsidiaries in low-tax countries.
Former President Trump and Congressional Republicans promised their new tax bill would boost U.S. hiring without costing taxpayers, but tax experts say otherwise. One prominent study found companies that benefited most from the Republican tax breaks for profits parked offshore invested more overseas following the law’s passage than they did in the United States.
Another study estimates closing offshore tax loopholes could save $77 billion in revenue annually.
The No Tax Breaks for Outsourcing Act would repeal offshoring incentives by:
- Equalizing the tax rate on profits earned abroad to the tax rate on profits earned here at home. This legislation would end the preferential tax rate for offshore profits by eliminating the deductions for “global intangible low-tax income” (GILTI) and “foreign-derived intangible income” and applying GILTI on a per-country basis.
- Repealing the 10 percent tax exemption on profits earned from certain investments made overseas. In addition to the half-off tax rate on profits earned abroad, the Trump tax exempts from taxation entirely a 10 percent return on tangible investments, such as plants and equipment, made overseas. Our bill would eliminate this offshoring incentive.
- Treating “foreign” corporations that are managed and controlled in the U.S. as domestic corporations. Ugland House in the Cayman Islands is the five-story legal home of over 18,000 companies, many of them really American companies in disguise. This section would treat corporations worth $50 million or more and managed and controlled within the U.S. as the U.S. entities they in fact are, and subject them to the same tax as other U.S. taxpayers.
- Cracking down on inversions by tightening the definition of expatriated entity. This provision would discourage corporations from renouncing their U.S. citizenship. It would deem certain mergers between U.S. companies and smaller foreign firms to be U.S. taxpayers, no matter where in the world the new companies claim to be headquartered. The combined company would continue to be treated as a domestic corporation if the historic shareholders of the U.S. company own more than 50 percent of the new entity. If the new entity is managed and controlled in the U.S. and continues to conduct significant business here, it would continue to be treated as a domestic company regardless of the percentage ownership.
- Combating earnings stripping by restricting the deduction for interest expense for multinational enterprises with excess domestic indebtedness. Some multinational groups reduce or eliminate their U.S. tax bills by concentrating their worldwide debt, and the resulting interest deductions, in its U.S. subsidiaries. This section would disallow interest deduction for U.S. subsidiaries of a multination corporation where a disproportionate share of the worldwide group’s debt is located in the U.S. entity, a tactic commonly known as “earnings stripping.” The limit for each U.S. subsidiary would equal the sum of the subsidiary’s interest income plus its proportionate share of the corporate group’s net interest expense.
- Eliminating tax break for foreign oil and gas extraction income. Oil and gas extraction income earned abroad gets a further break on the already half-off rate other industries pay on their offshore profits. This provision would eliminate this special tax break for big oil and gas companies.
Labor organizations determined to stop the continued exporting of American jobs, which have previously endorsed the bill include American Federation of Government Employees (AFGE); American Federation of Labor & Congress of Industrial Organizations (AFL-CIO); American Federation of State, County and Municipal Employees (AFSCME); American Federation of Teachers; Communication Workers of America (CWA); International Association of Machinists & Aerospace Workers (IAMAW); International Brotherhood of Teamsters; International Federation of Professional and Technical Engineers (IFPTE); International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW); IUE-CWA; National Education Association (NEA); Service Employees International Union (SEIU); United Steelworkers (USW); UNITE HERE; Union Veterans Council, AFL-CIO; Working America, AFL-CIO.
Other organizations that have previously endorsed the bill include AfricaFocus Bulletin; Alliance for Retired Americans; American Family Voices; Americans for Democratic Action (ADA); Americans for Tax Fairness; American Sustainable Business Council; Association of Concerned Africa Scholars – USA; Campaign for America’s Future; Center for International Policy; Center for Popular Democracy; Coalition on Human Needs; Color of Change; Community Change Action; Congregation of Our Lady of Charity of the Good Shepherd, U.S. Provinces; Corporate Accountability Lab; Crude Accountability; DailyKos; Democrats.com; Economic Policy Institute; Fair Share; Faith Action Network; Financial Accountability and Corporate Transparency (FACT) Coalition; Franciscan Action Network; Friends of the Earth U.S.; Fund for Constitutional Government; Global Alliance for Tax Justice ; Global Financial Integrity; Greenpeace US; Grey Nuns of the Sacred Heart; Health Care for America Now; Indivisible; Institute for Policy Studies – Inequality Program; Institute on Taxation and Economic Policy (ITEP); Interfaith Center on Corporate Responsibility (ICCR); International Rights Advocates; Jobs With Justice; Jubilee USA; Liberty Shared; Main Street Alliance; Maryknoll Fathers and Brothers; Missionary Oblates; MomsRising; National Advocacy Center of the Sisters of the Good Shepherd; National Employment Law Project; National Organization for Women; NETWORK Lobby for Catholic Social Justice; Our Maryland; Our Revolution; Oxfam America; Patriotic Millionaires; Peace Education Center; Progressive Change Institute; Project Blueprint; Public Citizen; Publish What You Pay – United States; Responsible Wealth; RESULTS; Rights CoLab; RootsAction.org; Sisters of St. Francis of Philadelphia; Small Business Majority; South Carolina Small Business Chamber of Commerce; Strong Economy For All Coalition; Take on Wall Street; Tax Justice Network; Tax Justice Network USA; Tax March; United for a Fair Economy; United Church of Christ, Justice and Witness Ministries; United Methodist Church – General Board of Church and Society; US-Africa Bridge Building Project; Voices for Progress; Washington Fair Trade Coalition; Working Partnerships USA.
Full text of the bill is available here.