NEW YORK–(ENEWSPF)–December 9, 2015. Just weeks after Pfizer announced plans to merge with a foreign-based company mainly to avoid paying its fair share of U.S. corporate taxes, Hillary Clinton is proposing reforms to crack down on companies that exploit tax loopholes and seek to lower their tax bill by moving abroad on paper – and pledging to pursue a key element of her plan through execution action if necessary.
“The maneuvers powerful corporations are using to game the system and leave everyday taxpayers holding the bag are just offensive,” Clinton said at a town hall today in Waterloo, Iowa. “All told, inversions by Pfizer and other companies, plus related loopholes, will cost American taxpayers more than $80 billion in revenue over the next 10 years. That’s money we should be investing here at home. This is not only about fairness; this is about patriotism. I want to raise the cost to corporations that try to get out of paying their fair share.”
A central element of Clinton’s proposal is a commitment to crack down on “earnings stripping” – a maneuver through which multinational corporations game the tax system to shift profits overseas to countries with lower tax rates while maximizing high deductions in the U.S. This would close a loophole that costs taxpayers as much as $60 billion over 10 years.
Republicans in Congress should stop standing in the way of action, and it would be better for Congress to itself close this loophole. But Clinton is vowing that, if Congress has not acted to end this practice, she would ask Treasury to restrict “earnings stripping.”
This practice, which could be a benefit of the Pfizer-Allergan merger, costs our nation needed revenues and disadvantages domestic American businesses and individuals who cannot take advantage of this loophole. Clinton has decried the Pfizer deal, saying it will “leave U.S. taxpayers holding the bag.”
In addition to cracking down on “earnings stripping,” Clinton’s plan would stop inversions and related transactions by requiring that, for any merger that a U.S. firm pursues in order to expatriate, the shareholders of their foreign merger partner must control a 50 percent stake of the combined company. Current law only requires a 20 percent threshold. Clinton would also impose an “exit tax” on the untaxed overseas earnings of corporations that give up their U.S. residence, which would capture companies that attempt to game the 50 percent threshold through tax planning and ensure they pay their fair share on untaxed overseas earnings.
Clinton believes we need comprehensive business tax reform, but we cannot wait for that broader conversation to prevent inversions. Clinton remains committed to using the proceeds from closing these loopholes to provide incentives to bring jobs back to America and support manufacturing, research and small businesses.
This push continues her month-long focus on job creation and reinvestment in the U.S. that raises incomes for families – following announcements of her $275 billion plan to invest in U.S. infrastructure and her comprehensive plan to win the global competition for advanced manufacturing jobs.
A fact sheet on Clinton’s proposals to end inversions and crack down on corporate tax avoidance is available here.
Source: www.hillaryclinton.com
