(Washington, DC) Congress is considering tax cuts on offshore corporate profits as a way to boost short-term revenue for infrastructure investment. A new report released today by the Center for Effective Government and the Institute for Policy Studies, reveals why this would be short-sighted.
The report, Burning Our Bridges, finds that just 26 companies account for more than half of the $2.1 trillion U.S. companies are holding in untaxed offshore profits. By simply paying taxes owed on these profits, these corporations could cover the cost of key infrastructure investments:
- If Apple, the largest offshore profit stockpiler, paid what it owes in taxes, the revenue would cover 17 percent of the cost of needed repairs on all public school buildings.
- If General Electric paid taxes on the profits it holds offshore, the estimated revenue would pay for all of the unmet maintenance needs in local, state, and national parks – and more.
- If seven major pharmaceutical firms that stash profits offshore paid the taxes they owe, the revenue could replace all of the deficient bridges in the United States.
“Rather than giving these tax-dodging corporations another tax break, Congress could close all offshore tax loopholes,” said Sarah Anderson, IPS Global Economy Director and a report co-author.
Congress has floated several one-time “tax holiday” proposals to encourage companies to bring profits back to the United States at very low tax rates. Each of these proposals rewards the very companies that have worked the hardest to game the tax system. These policies would also shortchange our future by generating just a small fraction of the $3.6 trillion we need to invest in our aging infrastructure by 2020 and wouldn’t address the longer-term problem of legalized tax dodging.
“Corporate CEOs often view taxes as a cost to be managed, not an investment in America and an infrastructure that will create a competitive, innovative future,” said Scott Klinger, Director of Revenue and Spending Policies at the Center for Effective Government and a co-author of the report. “Congress can ensure that America’s corporations pay for the public services and investments on which we all depend, assuring a brighter future for American business – and for all of us.”
This is the latest in a series of joint IPS-CEG reports related to corporate tax-dodging. In November 2014, they analyzed corporations that pay their CEOs more than they pay in federal income taxes. The report, Fleecing Uncle Sam, received coverage in Reuters, Politico, and the Wall Street Journal, among other outlets.
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The Center for Effective Government is dedicated to advancing a government that protects people and the environment and encourages an engaged, informed citizenry. Find the Center for Effective Government on Facebook and Twitter.
The Institute for Policy Studies (IPS-DC.org), is an independent multi-issue think tank founded in 1963. IPS provides inequality analysis and solutions through its monthly Too Much newsletter and the website Inequality.org.