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Letter Opposing Rep. John Delaney's Tax Repatriation Amnesty Bill

Letter Opposing Rep. John Delaney's Tax Repatriation Amnesty Bill

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Published by David Moon
This letter is signed by many progressive organizations who oppose a proposal by Congressman John Delaney (a Maryland Democrat) to allow corporations who sheltered earnings abroad to "repatriate" their funds.
This letter is signed by many progressive organizations who oppose a proposal by Congressman John Delaney (a Maryland Democrat) to allow corporations who sheltered earnings abroad to "repatriate" their funds.

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Published by: David Moon on Jul 28, 2013
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10/07/2013

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Organizations Opposing Rep. Delaney’sBill Creating a Repatriation Tax Amnesty andan Infrastructure BankControlled by Corporate Tax Dodgers
July 16, 2013Dear Representative:We urge you to reject the Partnership to Build America Act (H.R. 2084, introduced by Rep. JohnDelaney), which calls for a “repatriation taxholiday” allowing U.S. multinational corporations to bringhome offshore profits
tax-free
if some of the money is used to buy bonds in an infrastructure bank. Atemporary corporate taxholiday is, pure and simple, a form of tax amnesty. It would permit a smallnumber of multinational corporations to dodge their rightful tax obligations, thereby requiring domesticcorporations, small businesses,and average taxpayers to pick up their tab.While an infrastructure bank capitalized through traditional government expenditures could provideadditional credit to help finance needed infrastructure investment and create jobs, an infrastructurebank capitalized in the manner set out in Rep. Delaney’s bill would disastrously undermine our ability toinvest in 21
st
century infrastructure by further incentivizing offshore tax dodging at the taxpayer’sexpenseand giving control of the bank to the worst corporate tax dodgers.
A repatriation tax amnestyis a costly and unwarranted tax break.
With Congress struggling to addressthe projected long
‐term deficits while continuing to fund public priorities, allowing corporations to bring
back profits stashed overseas at a very low –or zero –tax rate is anarrowlytargeted tax break that isunjustifiable.Contrary to proponents’ claims, it is not a way to capitalize an infrastructure bank at nocost to taxpayers; rather, the bill offers multinational tax dodgers a tax cut bribe worth up to $105billion to capitalize a $50 billion bank.
A repatriation tax amnesty rewards the worst corporate actors.
Those corporations that would gainthe most from a repatriation tax amnestyaggressively shift profits on paper to offshore subsidiaries intax havenswhere they pay little or no tax. Many of these subsidiaries have few, if any employees. WhenCongress last offered a tax holiday in 2004, just .015% of U.S. companies were able to benefit, and 15large companies accounted for half of the offshore cash repatriated, according to theSenate PermanentSubcommittee on Investigations.
A repatriation tax amnesty will not create U.S. jobs—even with this poorly designed infrastructurebank.
The 2004 repatriationamnesty, justified as a job-creating measure, was a dismal failure. Many of the companies that benefitted most from the tax amnesty actually reduced their U.S. employment anddid not make investments in production capacity, according to theSenate Permanent Subcommittee onInvestigations. Instead, a study by theNational Bureau of Economic Researchfound that 92% of the cash repatriated paid for dividends, stock buybacks, or executive bonuses.Rep. Delaney’s bill seeks to address this concern by tying the repatriation tax amnesty to the purchase of bonds of a new infrastructure bank. Corporations could be allowed to bring back up to $6 at a zero taxrate for every $1 in bonds purchased; the exact ratio would be determined by an auction. The biddingprocess in this bill would open the door for gaming and collusion, especially given that seven of the 11-member board of directors would come from the companies repatriating the most money. As Citizensfor Tax Justice explains, this means thatthe most aggressive corporate tax dodgers would effectivelycontrol the infrastructure bank. That is hardly the way to ensure that these taxpayer-subsidizedinvestments address our most pressing infrastructure needs and create good jobs.
Another repatriation tax amnesty would encourage corporations to be even more aggressive inmoving jobs and profits offshore, losing revenue and adding to the deficit.
If Congress repeats the

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