This year’s tax filing deadline is only days away, and millions of hard-working families across the country are preparing to submit their forms and pay their fair share.
Meanwhile, huge multinational corporations- some of the largest and best-known brands in the world- are taking advantage of loopholes in our tax code and various accounting maneuvers to hide their profits overseas and avoid paying taxes on their income. These corporations enjoy incredible benefits from operating in this country, including access to our markets, our infrastructure, and our educated and talented workforce. They must also pay their part to maintain and strengthen our public investments in these areas.
Taxes fund our democratic government and the public goods we all enjoy and many of us depend on, like our schools, emergency services, transportation networks, and our national defense programs. But while hard-working families and small business across the country pay into those programs and keep them going, these corporations often shirk their responsibilities to our society.
In at least one instance, loopholes in the law and a lack of public reporting allowed Apple to pay no taxes on $30 billion in profits. This tax dodge was unknown to the American public until a Senate investigation subpoenaed previously undisclosed financial documents.
This type of secrecy undermines accountability, and the American people pay the price. Experts estimate the total annual cost to taxpayers of corporate tax avoidance amounts to $135 billion. One study calculated that small businesses in the U.S. have to shoulder, on average, an extra “$5,128 in taxes to make up for the revenue lost due to the abuse of offshore tax havens by multinational corporations.”
The Supreme Court has exacerbated the problem by giving corporate entities new rights under misguided decisions such as the Citizens United ruling. It is time these companies also accept their societal responsibilities and stop gaming our tax system.
Last week, I introduced the Tax Fairness and Transparency Act to ensure that multinational corporations report and pay taxes. The legislation is comprehensive but not complicated, confirming that it is possible for us to enact simple, effective, and progressive tax reform to help level the playing field.
The bill takes three common sense steps to prevent the offshore gaming by multinational corporations. First, it revokes the ability of corporations to indefinitely defer paying taxes on profits they hold offshore. Second, it removes a key incentive for U.S. firms to move their headquarters overseas for tax purposes by limiting the practice of companies transferring earnings from their U.S. subsidiaries to entities in tax havens. Third, it requires companies to report their earnings and taxes paid on a country-by-country basis, a simple transparency measure to shed light on profit-shifting activities.
Making the tax code more progressive is one of the most effective ways we can address income inequality and the wealth gap in this country. Corporations’ share of wealth in this country is increasing, while at the same time their share of the tax burden has dropped in recent decades.
If we want to build a fair and sustainable economy that works for everyone, we can start by making these simple, bold, and achievable steps to restoring integrity our tax system.