We're signal boosting Indivisible's upcoming Tax Scam Week of Action on the Couch this week! Below you'll find their segment on how corporations have profited from the current tax plan, and what corporate greed will look like under the proposed plan. Get informed, and then get involved!
Corporations are Already Gaming the Tax System—Trump Wants to let them Pay Even Less
In addition to giving a massive tax cut to wealthy individuals, the other half of the Trump Tax Scam is to give huge tax giveaways to corporations. These tax cuts will—just like the tax cuts on the individual side—flow almost exclusively to the wealthy. And, since non-US-citizens own 35% of outstanding US corporate stocks, that means about one-third of the benefit from this cut ends up offshore.
Corporations are seeing significant profits and there is little evidence corporate tax rates affect their “competitiveness,” but Republicans want to let them off the hook for paying their fair share anyway.
This document explains two of the most costly, unnecessary corporate tax cuts Republicans want to push through.
CUTTING THE CORPORATE RATE
Get used to hearing this key Republican talking point, if you haven’t heard it already: “The US has the highest corporate tax rate in the world.” When they say that, they’re referring to the statutory tax rate, which is 35%. (Statutory meaning the amount they’re supposed to pay under the law.) But what they actually pay, the effective rate, is about 14% according to the Government Accountability Office, which is comparable to the rest of the world.
Despite all of this, Republicans want to slash the corporate tax rate from the current 35% to 20%, which is estimated to cost $2 trillion in revenue. Even worse, cutting the corporate rate almost exclusively benefits wealthy individuals and could actually hurt—not help—workers in the long run.
LETTING CORPORATIONS STASH PROFITS OVERSEAS
US corporations make money at home, and they make money overseas. Our current system allows corporations to game the system so that they don’t have to pay any tax on the profits they make overseas. By setting up phony foreign entities and arranging their accounts in certain duplicitous ways, they can avoid US tax altogether. As a result, there is currently approximately $2.6 trillion parked overseas that corporations have not paid taxes on.
Republicans plan to replace the current international tax rules with what they call a “territorial” system. This would mean certain income wouldn’t be taxed at all—creating even more of an incentive than current law to shift profits offshore since they will never owe a dime in U.S. on these earnings.
Republicans also want to change how profits are taxed once corporations bring the profits back to the US (called “repatriating.”) Since there is currently $2.6 trillion in untaxed profits lingering overseas, Republicans want to offer a super-discounted tax rate—Trump has suggested a rate as low as 4%—as an incentive for corporations to repatriate these profits. This would forgo large sums of revenue that could never be recaptured.
WHAT YOUR MEMBERS OF CONGRESS SHOULD DO
Members of Congress—both Democrats and Republicans—should oppose any plan that reduces the corporate tax rate to the levels proposed. With corporate profits nearing record levels, there is no reason your MoC should give them a tax cut that jeopardizes our commitment to funding Social Security, Medicare, Medicaid, and other essential services.
They should also oppose any plan that further incentivizes corporations to keep profits offshore or loses significant revenue through a much lower rate on repatriated overseas profits. Your MoC should be closing loopholes that let corporations off the hook for paying their fair share—not making the loopholes larger.