Senate tax plan would raise penalties on US companies shifting profits overseas
Congress still divided on infrastructure amid ongoing inflation concerns
Virginia Republican Ben Cline weighs in on excess spending and runaway inflation on ‘The Evening Edit’
U.S. corporations would be hit with steeper penalties for shifting profits overseas under a draft proposal unveiled Wednesday by Senate Democrats as lawmakers look to generate revenue for President Biden's sweeping, multitrillion-dollar economic plan.
The plan, released by Sens. Ron Wyden, Sherrod Brown and Mark Warner, focuses on making changes to three international tax provisions included in Republicans' 2017 tax law. Companies that move money and assets offshore to shrink their liability could face harsher consequences – while those that invest in the U.S. with research and development could be rewarded with greater tax benefits.
WEALTHY AMERICANS SHIELD 20% OF THEIR INCOME FROM THE IRS, STUDY SHOWS
"Our draft legislation would generate critical revenue to pay for priorities in Democrats’ reconciliation bill, and encourage additional investment in our country and its workers," Wyden, the chair of the Senate Finance Committee, said in a statement.
It's just one piece of the $3.5 trillion tax and spending plan that Democrats are currently crafting and planning to pass later this year along a party-line vote. The process, known as reconciliation, cleared a major hurdle on Tuesday after House Democrats overcame interparty squabbling and passed a $3.5 trillion budget resolution, along with a bipartisan $1 trillion infrastructure bill.
Money from the crackdown on corporate tax avoidance would be used to fund "critical investments," including paid family leave and the expanded child tax credit, Wyden said.
YELLEN SAYS HIGHER TAXES NEEDED IN LONG TERM TO FINANCE US SPENDING
The lawmakers did not include specific tax rates in the proposal.
Biden has called for raising the domestic corporate rate to 28% from 21% and increasing the global minimum on companies' overseas profits to 21% from about 13%. But some Democrats, including Sen. Joe Manchin, have objected to those figures. With a 50-50 Senate split, Democrats cannot afford to lose the support of a single caucus member without imperiling the reconciliation bill's passage.
At the same time, a group of 130 nations, including the U.S. reached a groundbreaking agreement in July for a global minimum tax rate of 15% on multinational corporations, regardless of where they operate.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
The minimum global corporate tax rate is intended to eradicate certain tax havens that allow multinational companies to shield their profit, while giving smaller countries more tax revenue from bigger firms. Treasury Secretary Yellen has said a global tax, which would apply to companies' overseas profits, would eliminate what she's described as a "global race to the bottom" in terms of corporate taxes.
Corporations employ a litany of tactics to reduce their tax liability, often by shifting profits, and revenues, to low-tax countries such as Bermuda, the Cayman Islands or Ireland, regardless of where the sale was made. The practice by American and foreign multinationals costs the U.S. tens of billions of dollars each year, according to the Treasury Department.
Source: Read Full Article