Corporate Taxes
Congressional Hearing Highlights Problems with the Border Adjustment Tax
May 25, 2017 • By Richard Phillips
The debate over the so-called border adjustment tax (or BAT) took center stage this week when the House Ways and Means Committee held its first hearing on the topic. Despite strong support by the House Republican leadership and the Chairman of the Ways and Means Committee, Rep. Kevin Brady, the proposal faced an onslaught of criticism during the hearing from invited witnesses and members of both parties.
Tax Avoiding Companies Well Represented at Tax Reform Hearing
May 18, 2017 • By Richard Phillips
Today the House Ways and Means Committee will hold its first tax reform hearing of 2017, which marks the official opening of the tax reform debate in Congress. True tax reform, if the committee sought to achieve it, could create more jobs and ensure companies are paying their fair share by cracking down on the massive offshore tax avoidance that companies engage in. Unfortunately, the panel of witnesses for today’s hearing is largely made up of representatives of various major corporations that are beneficiaries of the loopholes in our current corporate tax laws. Given this, it seems likely that these…
Representative John Delaney’s Bills Take the Wrong Approach on Funding Infrastructure
May 9, 2017 • By Richard Phillips
Lawmakers across the political spectrum recognize the need for additional spending to maintain and upgrade our nation’s transportation infrastructure. According to the Federal Highway Administration, there is a backlog of $836 billion in needed repairs and improvements to roads and bridges and an additional $90 billion backlog of public transit projects. Maryland Democratic Representative John […]
Apple: A Case Study in Why a Tax Holiday for Offshore Cash is Indefensible
May 4, 2017 • By Matthew Gardner
The Apple corporation made waves earlier this week with its disclosure that its worldwide cash now exceeds $250 billion. Less noticed was a separate disclosure on Wednesday that the company’s offshore cash now exceeds $239 billion, meaning that more than 93 percent of the company’s cash is now held—at least on paper—abroad. This represents an […]
President Trump’s Corporate Tax Outline: At Least He Didn’t Use a Napkin
April 27, 2017 • By Matthew Gardner
The most complimentary thing that can be said about the corporate tax changes outlined by President Trump earlier this week is that they weren’t scribbled on a napkin. Unlike supply-side architect Arthur Laffer, who infamously sketched out his explanation for why tax cuts can somehow pay for themselves in this manner, the Trump Administration took […]
Does a 15 Percent Corporate Tax Rate Sound Low? For Dozens of Major Corporations, Maybe Not
April 25, 2017 • By Matthew Gardner
President Donald Trump has promised to release new details Wednesday on what he says could be “the biggest tax cut we’ve ever had.” While much is unclear about the shape this plan will take, the Wall Street Journal reported yesterday that it will include a 15 percent tax rate on corporate profits, less than half […]
The Trump Administration Should Not Reopen Offshore Loopholes Closed by Recent Regulations
April 21, 2017 • By Richard Phillips
A new executive order signed by President Donald Trump on Friday asks that Treasury Secretary Steven Mnuchin review significant tax regulations issued in 2016. The broader context of the order is that President Trump is seeking to roll back regulations across the government – many of which he claims are overly burdensome – and could […]
Fifteen (of Many) Reasons We Need Corporate Tax Reform
April 13, 2017 • By Matthew Gardner
Profitable Fortune 500 companies in a range of economic sectors have been remarkably successful in manipulating the tax system to avoid paying even a dime in tax on billions of dollars in U.S. profits. This ITEP report examines a select, diverse group of 15 corporations' tax situations to shed light on the widespread nature of corporate tax avoidance. As a group, these companies paid no federal income tax on $21 billion in profits in 2016, and they paid almost no federal income tax on $111 billion in profits over the past five years. All but one received federal tax rebates…
How to Shut Down Offshore Corporate Tax Avoidance, Full Stop
April 7, 2017 • By Richard Phillips
A new bill introduced this week by Rep. Mark Pocan (D-WI), the Tax Fairness and Transparency Act, would rip out the offshore corporate tax avoidance system by its roots. This legislation combines into a single, comprehensive bill elements of three pieces of legislation that Rep. Pocan has proposed in previous years. While many drivers of […]
Two New Bills Would Plug Major Loopholes in Our Offshore Corporate Tax System
April 6, 2017 • By Richard Phillips
A new pair of bills introduced by Representative Lloyd Doggett (D-TX) this week would crack down on loopholes that allow corporations and individuals to avoid paying their fair share in taxes. Rep. Doggett’s Stop Tax Haven Abuse Act, which was sponsored by Senator Sheldon Whitehouse (D-RI) in the Senate, would close a number of the […]
New Analysis Compares Tax Rates Paid by Companies Lobbying for/against Border Adjustment Tax
March 31, 2017 • By Matthew Gardner
An Institute on Taxation and Economic Policy analysis finds that, on average, companies that are opposed to the Border Adjustment Tax pay higher tax rates than a coalition of companies lobbying against the tax. The Border Adjustment Tax or BAT is being proposed as part of a broader GOP plan to overhaul the corporate tax […]
A Comparative Analysis: Tax Rates Paid by Companies for and Against the Border Adjustment Tax
March 30, 2017 • By Richard Phillips
It’s often noted that corporate tax reform is difficult, in part, because it creates so many winners and losers. As Congress turns its attention to federal corporate tax reform, the House GOP’s proposed border adjustment tax, which is intended to raise enough revenue to justify cutting the corporate tax rate from 35 to 20 percent, […]
The $767 Billion Money Pot Driving Tax Reform
March 28, 2017 • By Richard Phillips
With the failure of legislation to repeal the Affordable Care Act, the Trump administration and Republicans lawmakers are moving on to corporate tax reform. At the heart of this debate is the problem of corporations shifting their profits to foreign tax havens to avoid U.S. income taxes. A new report by the Institute on Taxation […]
Fortune 500 Companies Hold a Record $2.6 Trillion Offshore
March 28, 2017 • By Matthew Gardner
All told, Fortune 500 corporations are avoiding up to $767 billion in U.S. federal income taxes by holding more than $2.6 trillion of "permanently reinvested" profits offshore. In their latest annual financial reports, 29 of these corporations reveal that they have paid an income tax rate of 10 percent or less in countries where these profits are officially held, indicating that most of these profits are likely in offshore tax havens.
Corporations’ Offshore Cash Hoard Grew to $2.6 Trillion in 2016
March 28, 2017 • By ITEP Staff
U.S. corporations now hold a record $2.6 trillion offshore, a sum that ballooned by more than $200 billion over the last year as companies moved more aggressively to shift their profits offshore, according to a new report, Fortune 500 Companies Hold a Record $2.6 Trillion Offshore, released today by the Institute on Taxation and Economic Policy (ITEP).
Debunking the 35 Percent Corporate Tax Myth
March 9, 2017 • By Richard Phillips
For years, the number one tax policy talking point from corporate lobbyists has been the claim that the United States has the highest corporate tax rate in the world. The story then goes that this high tax rate is driving away business and Congress should move to dramatically lower it. A new study by the […]
The 35 Percent Corporate Tax Myth
March 9, 2017 • By Matthew Gardner, Richard Phillips
Profitable corporations are subject to a 35 percent federal income tax rate on their U.S. profits. But many corporations pay far less, or nothing at all, because of the many tax loopholes and special breaks they enjoy. This report documents just how successful many Fortune 500 corporations have been at using loopholes and special breaks over the past eight years. As lawmakers look to reform the corporate tax code, this report shows that the focus of any overhaul should be on closing loopholes rather than on cutting tax rates.
The Border Adjustment Tax Creates More Problems Than It Solves
February 22, 2017 • By Richard Phillips
In recent weeks, the Republican congressional leadership’s effort to introduce a comprehensive tax reform bill has increasingly faced opposition from major business groups and skeptical lawmakers from across the aisle. The primary source of dissent thus far is that the most prominent tax framework, the House GOP’s “Better Way” tax blueprint, contains a radical provision […]
Regressive and Loophole-Ridden: Issues with the House GOP Border Adjustment Tax Proposal
February 22, 2017 • By Matthew Gardner, Richard Phillips
In the summer of 2016, House Republicans released a blueprint for tax reform that is likely to be used as the starting point for major tax legislation in 2017.[1] One of the most radical provisions is a proposal to shift the corporate tax code from a residence-based to a destination-based system through applying a border adjustment on exports and imports. This proposal has major flaws that would make it a challenge to implement. Further, it is inherently regressive, rife with loopholes and would violate international agreements.
Trump Plan to Give Billions in Tax Breaks to Multinational Corporations May Have Bipartisan Support
January 18, 2017 • By Richard Phillips
There are a lot of troubling components of the tax reform packages being proposed by President-Elect Donald Trump and the House GOP, but one that especially stands out is the push to give companies a tax break on the earnings they are holding offshore. Unfortunately, proposals rewarding the nation’s most egregious tax dodging multinational corporations […]
Multinational Corporations Would Receive Half a Trillion in Tax Breaks from Trump’s Repatriation Tax Proposal
January 18, 2017 • By Richard Phillips
One of the central questions for lawmakers looking to reform the federal tax code this year is how to address the $2.5 trillion in earnings that U.S. companies are holding offshore to avoid taxes. Lawmakers on both sides of the aisle have supported proposals that would either require or allow companies to repatriate these earnings to the United States at a discounted tax rate. These proposals have ranged from letting companies repatriate their earnings tax-free to requiring them to immediately pay a discounted rate of 20 percent. All of the proposals would give corporations a substantial tax discount and forego…
Comprehensive Guide to “Repatriation” Proposals
November 28, 2016 • By Richard Phillips
Corporations falsely claim that they have to engage in offshore tax avoidance maneuvers because the U.S. corporate tax rate is too high, an argument which has unfortunately found an audience in lawmakers on both sides of the aisle. In 2017, Congress likely will evaluate a number of approaches to taxing the trillions of dollars corporations currently hold offshore. This report explains and evaluates these proposals, including a so-called repatriation holiday and deemed repatriation. Further, it explains why ending deferral of taxes on U.S. multinational corporations' foreign earnings could halt the widespread corporate practice of funneling money to subsidiaries for the…
Fact Sheet: What You Need to Know About Repatriation Proposals
November 28, 2016 • By Richard Phillips
Fortune 500 corporations collectively have stashed $2.5 trillion in profits offshore, on which they have avoided up to $718 billion in taxes. It's no wonder that policymakers on both sides of the aisle are weighing legislative options to either tax these profits or create an incentive for corporations to "repatriate" or bring these profits to the United States so that they are subject to taxation. Lawmakers have introduced several "repatriation" proposals that would glean tax revenue from these offshore profits. But the only solution that will ensure corporations pay taxes on their offshore profits AND shut down the practice of…
Offshore Shell Games 2016
October 4, 2016 • By Matthew Gardner, Richard Phillips
This study explores how in 2015 Fortune 500 companies used tax haven subsidiaries to avoid paying taxes on much of their income. It reveals that tax haven use is now standard practice among the Fortune 500 and that a handful of the country's wealthiest corporations benefit the most from this tax avoidance scheme.
Comment Letter to FASB on Income Tax Disclosure
September 30, 2016 • By Richard Phillips
We appreciate the Financial Accounting Standards Board's (FASB) ongoing review of its accounting standards to ensure that financial statements are "facilitating clear communication of information that is important to financial statement users." Overall, the changes to disclosure requirements proposed by FASB in the exposure draft would represent a significant step forward toward providing users of financial statements the clarity that they need. We believe, however, that the exposure draft does not go far enough in providing the clarity needed and sought by investors and the public alike.
ITEP’s corporate tax research examines the tax practices of major corporations. Besides its corporate study on average effective tax rates paid by the nation’s largest, most profitable corporations, throughout the year, ITEP produces research on subjects such as offshore cash holdings, tax haven abuse, executive stock options and other tax loopholes. See ITEP’s more recent study of profitable corporations’ tax rates.
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