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house Bill H.R. 297

Should it be Harder for Corporations to Avoid Taxes on Offshore Profits?

Argument in favor

This bill would incentivize corporations to move profits and jobs back to the U.S., thereby increasing federal tax income and helping combat inequality.

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04/18/2016
"Today, we lose over $100 billion a year in revenue because large corporations stash their cash in offshore tax havens around the world. That is unacceptable." [berniesanders.com]
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BarackObama's Opinion
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04/18/2016
"A lot of these loopholes come at the expense of middle-class families… There's always going to be illicit movement of funds but we shouldn't make it legal." [nbcnews.com]
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Steven's Opinion
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04/17/2016
They already get tax breaks as well as subsidies here. Then go international to avoid contributing to the system that built them in the first place. While continuing to make the majority of their profits here. Which is a slap in the face when it's my tax dollars supporting this behavior.
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Argument opposed

Additional tax and reporting regulations would stifle the global expansion of U.S.-based companies and create tax uncertainty for businesses.

operaman's Opinion
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04/17/2016
The very best way to prevent this problem without spending a dime is to lower corporate tax rates inviting corporations to do business inside the US. These off-shore accounts are part of US Tax Laws that allows oversea's earnings to remain overseas. Reducing Corporate Tax rates is the answer.
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vicratz's Opinion
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04/18/2016
It is a sign that the government's taxation policy is over burdensome. When they make it attractive to conduct business and invest here in the US companies and people won't find it tempting to avoid taxes in order to retain the earnings they need to invest.
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Libertarianus's Opinion
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04/17/2016
The fact that this is just to punish businesses for responding to higher taxes notwithstanding, this is remarkably hypocritical seeing as how the US is seen as a tax haven for other countries.
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What is House Bill H.R. 297?

The Stop Tax Haven Abuse Act aims to curb abuses of international tax laws.

It aims to close a variety of offshore tax loopholes, eliminate many of the existing incentives for companies to operate offshore, and impose stricter tax rules on corporations formed in mergers between U.S. and foreign companies.

Specifically, the legislation would amend the Internal Revenue Code to:

  • Expand reporting requirements for Americans who own shares in certain types of foreign companies.

  • Clarify when foreign financial institutions and U.S. citizens must report foreign financial accounts to the IRS under the Foreign Account Tax Compliance Act.

  • Prevent companies that are primarily managed and controlled in the U.S. from claiming foreign status for tax purposes.

  • Close the “credit default swap” loophole that allows corporations to avoid taxes by sending income offshore.

  • Strengthen the IRS’s ability to use “John Doe summons,” which are used in tax investigations to obtain information on a class of people when the names of offending taxpayers are unknown.

  • Forbid "earnings stripping," when a U.S. subsidiary decreases its taxable income by borrowing from and making large interest payments to a foreign subsidiary of the same corporation.

Under the legislation, multinational corporations would be required to file a report to the SEC each year listing their employees, sales, finances, tax obligations, and tax payments on a country-by-country basis. Companies failing to disclose any holdings or transactions would be fined.

The bill would also authorize a fine of up to $1 million for corporate insiders who illegally hide offshore holdings. It would increase the maximum fine for aiding and abetting tax evasion to 150 percent of any illegal gains.

It would also require bank examiners to use techniques that detect and prevent tax shelter abuse and tax evasion, and would require hedge funds and private equity funds to enact anti-money laundering programs.

Impact

U.S.-based multinational corporations, people who work for these companies and their shareholders, and the IRS.

Cost of House Bill H.R. 297

A CBO cost estimate is unavailable. That said, the bill would increase the total taxes paid to the federal government.

More Information

In Depth: In April 2016, millions of confidential financial documents were leaked from a law firm in Panama. The so-called Panama Papers identified international politicians, business leaders, and celebrities tied to suspicious financial transactions.

Later that month, anti-poverty charity Oxfam released a report revealing that Apple, Walmart, General Electric, and other massive U.S. corporations have stashed $1.4 trillion in offshore tax havens.


Of Note: The Stop Haven Abuse Act would drastically reform — but not completely end — the deferral of taxes on foreign profits.


Media:

Summary by Katie Rose Quandt
(Photo Credit: By H.M. Revenue & Customs CC BY 2.0)

AKA

Stop Tax Haven Abuse Act

Official Title

To end offshore tax abuses, to preserve our national defense and protect American families and businesses from devastating cuts, and for other purposes.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
      house Committees
      Committee on Financial Services
      Committee on Ways and Means
    IntroducedJanuary 13th, 2015
    "Today, we lose over $100 billion a year in revenue because large corporations stash their cash in offshore tax havens around the world. That is unacceptable." [berniesanders.com]
    Like (130)
    Follow
    Share
    The very best way to prevent this problem without spending a dime is to lower corporate tax rates inviting corporations to do business inside the US. These off-shore accounts are part of US Tax Laws that allows oversea's earnings to remain overseas. Reducing Corporate Tax rates is the answer.
    Like (19)
    Follow
    Share
    "A lot of these loopholes come at the expense of middle-class families… There's always going to be illicit movement of funds but we shouldn't make it legal." [nbcnews.com]
    Like (58)
    Follow
    Share
    They already get tax breaks as well as subsidies here. Then go international to avoid contributing to the system that built them in the first place. While continuing to make the majority of their profits here. Which is a slap in the face when it's my tax dollars supporting this behavior.
    Like (39)
    Follow
    Share
    Yes , we are hemorrhaging businesses to cheap foreign labor and lower corporate taxes. Making businesses attractive again to bring them home to the United States will be a good start, this is one way to start, along with cutting corporate tax rates
    Like (12)
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    It's a shame capitalism in America has become about profits rather than quality products that improve life. We should reform our tax law to make doing business in America more attractive, instead of "making it harder to evade taxes."
    Like (7)
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    It is a sign that the government's taxation policy is over burdensome. When they make it attractive to conduct business and invest here in the US companies and people won't find it tempting to avoid taxes in order to retain the earnings they need to invest.
    Like (6)
    Follow
    Share
    The fact that this is just to punish businesses for responding to higher taxes notwithstanding, this is remarkably hypocritical seeing as how the US is seen as a tax haven for other countries.
    Like (5)
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    This is great, but cut business taxes at home and raise them abroad, not just the latter. We need strong incentives to make American companies create American jobs again.
    Like (5)
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    Lower the corporate tax rate. Right now, it's the highest in the World.
    Like (4)
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    Lower the tax rate so there is incentive to remain here.
    Like (4)
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    No, first the government should think about the reasons why corporations are parking their money outside the USA. It's because the tax burden is to harsh. Reduce taxes and the government won't have to worry about corporations offshoring money.
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    These are the same corporate CEO's that vote republican to keep illegals out but will exploit them and their country for cheaper labor crippling our economy at the same time.
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    I don't believe we should tax offshore profits, unless, it's really just a loophole to get away from their taxes.
    Like (3)
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    Let's fix the tax code, that's the problem.
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    Let's put more money in our system. Easy as that.
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    Lower the business tax thereby creating an environment in which businesses can grow.
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    It's essentially breaking the law and stealing from the people.
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    Instead of imposing new restrictions on an already difficult tax code, we should lower corporate tax to stop this from happening in the first place. Make the tax code easier by simplifying it, including ending loopholes, and make corporations pay a lower corporate tax instead of none at all through all these tiny loopholes. I agree with some parts of the bill, but we need to lower the corporate tax if we expect big corporations to abide by the law and stay in the US.
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    To me, the dangers and unlawfulness of tax evasion outweigh the capitalistic desire for global expansion and conquest.
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