Sanders Asks Obama to Close Six Egregious Corporate Tax Loopholes
WASHINGTON, March 2 – Sen. Bernie Sanders (I-Vt.), the ranking member of the Senate Budget Committee, said President Obama could act on his own to raise over $100 billion over a decade by closing the worst corporate tax loopholes.
Sanders identified several actions that the White House could take to prevent corporations from using offshore tax havens and other tax dodges and to prevent wealthy individuals from avoiding income and estate taxes.
“Since the Republican-led Congress has refused to raise revenue by asking the most profitable corporations to pay their fair share, I would hope that the president could take executive action to remedy some of the most egregious loopholes,” Sanders said. “We have got to demand that companies like Apple, Hewlett-Packard, and General Electric stop engaging in legalized tax fraud that limits our ability to invest in the future.”
“At a time when this country has a $18 trillion national debt and a huge amount of infrastructure and social needs it is absurd that major profitable corporations pay nothing in federal taxes,” added Sanders, who last week issued a new detailed report on the extent of offshore tax havens by major American companies that have been most engaged in lobbying for new tax breaks and cuts to important programs for middle class families, such as Social Security, Medicare and Medicaid.
The six tax breaks that Sanders wants Obama and Treasury Secretary Jack Lew to eliminate are:
•The check-the-box loophole allows multinational companies to characterize their offshore subsidiaries in different ways to different governments so that their profits are untaxed.
•The Hewlett-Packard loophole allows American corporations to use short-term loans from their subsidiaries circumvent the requirement that they pay U.S. taxes on their offshore profits when those profits are brought to the U.S.
•The corporate inversions loophole allows an American corporation to merge with a (usually much smaller) foreign corporation and then reincorporate as a foreign company to avoid U.S. taxes even as it continues to operate and be managed in the U.S.
•The carried interest loophole allows hedge fund managers to characterize their compensation (which they earn for managing other people’s money) as capital gains, which is subject to lower personal income tax rates than other types of income. Tax experts have pointed out that the Treasury Department has the authority under existing law to determine how this income is taxed.
•Valuation discounts are restrictions placed on small business property given to family members (to keep the business in the family, for example) which are often meaningless but are claimed to dramatically reduce their value for estate and gift tax purposes.
•The real estate investment trust (REIT) loophole allows private prisons, billboard companies, casinos and other companies claim that they are making money from rents to avoid paying the corporate income tax.
http://www.sanders.senate.gov/newsroom/press-releases/sanders-asks-obama-to-close-six-egregious-corporate-tax-loopholes
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