WASHINGTON--(ENEWSPF)--April 24 -
Bloomberg and The Hill yesterday reported the disbanding of the lobbying effort to create a tax holiday for profits stashed in offshore tax havens. The “Win America Campaign,” which included corporate giants such as Cisco Systems, Duke Energy, Pfizer and Microsoft, ended its relationship with two of its three lobbying firms in March, according to forms reportedly filed with the U.S. Senate last week. Public filings suggest the group spent $760,000 on the effort last year.
“This is a major victory for American taxpayers. Members of Congress resisted a massive lobby push to allow companies that use offshore tax havens to indefinitely avoid paying their taxes. Ordinary taxpayers and small businesses must pick up the tab when these multinational corporations avoid their taxes,” said Phineas Baxandall, the Senior Tax and Budget Policy Analyst at the U.S. Public Interest Research Group (U.S. PIRG).
The citizen advocacy group released a report earlier this month quantifying how much a typical tax filer or small business would need to pay to pick up this tax tab. A Senate Joint Investigations study found approximately $100 billion in lost revenue as a result of offshore tax havens each year.
Current law allows companies to defer paying taxes on income that they claim was made offshore. Until they declare those profits to be brought back into the United States (“repatriated”) they do not pay corporate income tax levies, which subtract any taxes paid overseas. A Senate study found that approximately half of those unrepatriated funds nonetheless are placed in U.S.-based banks or other financial institutions. A tax holiday would allow a window during which profits could be brought back into the U.S. while paying little or no U.S. taxes.
Economic studies showed the last tax holiday, in 2004, failed to produce jobs, as corporations that took advantage of the holiday instead often used the repatriated funds to buy back their own stock while laying off workers. The Joint Committee on Taxation this year concluded that another repatriation tax holiday would add $78 billion to the deficit over a decade.
The victory comes on the heels of full Senate passage last month of another measure that would give law enforcement officials important tools to stop foreign financial institutions in places like the Cayman Islands from aiding U.S. tax cheats. Another regulation approved last week also cracks down on tax evaders by requiring banks to report to the IRS on interest paid to those who claim to be non-U.S. account holders.
“These are small but significant victories,” said Baxandall. “Americans are sick of seeing profits shipped to the Cayman Islands while we face cuts and higher debt. At some point, enough is enough.”