Democrat Congressman Lloyd Doggett, a member of the Ways and Means Committee, and Senator Sheldon Whitehouse have introduced the Stop Tax Haven Abuse Act to close what they claim are “egregious offshore tax loopholes that allow companies with armies of lawyers to avoid taxes by making profits earned here in America magically appear on the books in tax havens like the Cayman Islands.”
“This legislation would shut down the complex shell games that allow corporations and the superrich to hide their profits in island tax havens, forcing working families and small businesses to make up the difference,” Doggett said. “Tax-dodging is not a victimless offense. These gaping corporate tax loopholes provide troubling incentives to invest abroad instead of at home, shipping jobs offshore and harming our communities at the same time that they deplete our ability to pay for our national security and other important public services,” he added.
The lawmakers cited a Tax Justice Network estimate that America loses $90 billion in revenue “to offshore tax dodging”.
Various versions of a Tax Haven Abuse Act have been introduced since 2007.
The proposed act aims to improve tax enforcement; strengthen anti-money laundering laws; introduce the country-by-country reporting of profits, taxes and investments by companies; and improve the disclosure of offshore accounts.
It would amend the Base Erosion and Anti-Abuse Tax (BEAT) by making companies with gross receipts of $100 million, rather than $500 million, subject to the tax; close a loophole that allowed royalty payments to escape the tax and eliminate a 3%-exemption threshold, the lawmakers said.
The act would also extend existing limitations for companies to transfer intellectual ownership offshore to partnerships and eliminate tax breaks for the oil and gas industry.
“Hard-working American families don’t get offshore tax shelters to avoid paying taxes, so why let big multinational organizations and the ultra-rich have this dodge?” said Senator Whitehouse, who is a member of the Finance Committee.
“This bill would crack down on big corporate tax evaders and wealthy tax cheats, making the tax code fairer for those who don’t have special access.”
The bill has been referred to the Ways and Means Committee and the Committee on Financial Services.