“Congress should not be giving tax breaks to companies that ship profits and jobs offshore”
WASHINGTON – Americans for Tax Fairness (ATF) today released a letter signed by 30 organizations including the AFL-CIO, AFSCME, Coalition on Human Needs, Every Child Matters, Friends of the Earth, Main Street Alliance, National Education Assoc., NETWORK, National Women’s Law Center and SEIU – calling on members of the House Ways and Means Committee to oppose six business tax extender bills unless they are paid for, which will make $309 billion in tax breaks permanent, and to oppose two bills outright – H.R. 4429 and H.R. 4464 – “because Congress should not be giving tax breaks to companies that ship profits and jobs offshore.”
The letter states:
H.R. 4429 would make permanent the “Active Financing Exception,” a loophole used by Wall Street banks and other corporations with large financing divisions to move profits to tax havens like Bermuda and the Cayman Islands in order to avoid paying federal income taxes. The loophole is one of the principal methods by which General Electric avoided paying federal income taxes between 2008 and 2012 – it received $3 billion in refunds on more than $27 billion in profits, according to a recent study by Citizens for Tax Justice.
H.R. 4464 would make permanent the CFC Look-Through Rule, a loophole that allows American corporations to move profits on rents, royalties and other income to low-tax or no-tax counties. Using the loophole, companies like Apple move on paper profits to subsidiaries in countries like Ireland. The Senate Permanent Subcommittee on Investigations found in 2013 that Apple had used this and other loopholes to pay zero federal income taxes on billions of dollars in profits.
If the Active Financing Exception loophole becomes law, it will add $59 billion to the federal deficit over the next 11 years, according to the Joint Committee on Taxation. If the CFC Look-Through Rule is adopted, it will add $20 billion to the deficit. The markup of these budget busting bills comes in the wake of legislative battles over the deficit, in which many members of Congress have insisted that all new spending be “paid for” with offsetting budget cuts. When the Senate Finance Committee passed a temporary extension of these loopholes and other tax breaks in early April, a New York Times editorial called the double standard “hypocritical.”
Corporate lobbying in favor of the Active Financing Exception has been intense. Between January 2011 and September 2013, 292 lobbyists representing 41 companies and trade associations lobbied on the Active Financing Exception, according to a recent report by Americans for Tax Fairness and Public Campaign. General Electric alone paid 48 lobbyists to defend its position on this loophole.
Corporate lobbyists have aggressively pressed lawmakers with a misleading argument – that the Active Financing Exception merely gives financial income the same tax treatment outside the U.S. as income earned by non-financial companies on the sale of other goods and services. This omits the fact that financial institutions can easily make it appear that income earned in the U.S. was generated offshore. General Electric, the company that lobbies most intensely for the Active Financing Exception, was the subject of a Pulitzer Prize-winning story in The New York Times, “G.E.’s Tax Strategies Let it Avoid Taxes Altogether.”
Americans for Tax Fairness is a diverse coalition of 400 national and state organizations that collectively represent tens of millions of members. The organization was formed on the belief that the country needs comprehensive, progressive tax reform that results in greater revenue to meet our growing needs. ATF is playing a central role in Washington and in the states on federal tax-reform issues.