“Liberals” Need To Nip This Massive Corporate Tax Break in The Cradle

Dave Johnson

Sen. Charles Schumer’s (D-Wall Street) is expected to become the Democratic leader in the Senate and potential Majority Leader. He is said to be pushing for a huge, huge corporate tax break, which would reward the largest tax-dodgers for dodging taxes, thereby making the companies that did pay their taxes into suckers.

“Liberals” need to kill this toxic giveaway scheme in the bud.

Wednesday’s Progressive Breakfast notes:

Liberals wary of Schumer tax plan” reports The Hill:
“Sen. Charles Schumer’s (D-N.Y.) ideas for overhauling the tax system are encountering skepticism on the left … viewing them as too favorable to corporations at a time when populist sentiment is running high … Schumer has floated the idea of ‘deemed repatriation’ for corporate earnings outside the U.S. and a minimum tax on future foreign earnings regardless of whether they are repatriated. While Schumer has not specified the rates he would like to see for those taxes, he has suggested they should be lower than 35 percent … opposition from the left is unlikely to deter Schumer, who has shown a willingness to take on the liberal base in the past.”

Giant, multinational corporations have around $2.6 of profits stashed in tax havens thanks to various schemes to dodge the taxes they owe. They owe somewhere over $720 billion in taxes on that stash. Schumer is said to be talking about collecting $100 billion for infrastructure projects, thereby letting them keep maybe $620 billion of the $720 billion they owe. Wow. It’s not clear why only “liberals” would be concerned about a massive tax giveaway to corporations.

The Hill story notes that Schumer apparently thinks the US government does not have the power to compel these giant corporations to pay all of what they owe:

American companies have an estimated $2.6 trillion stored overseas, according to the Joint Committee on Taxation.

Schumer has floated the idea of “deemed repatriation” for corporate earnings outside the U.S. and a minimum tax on future foreign earnings regardless of whether they are repatriated. While Schumer has not specified the rates he would like to see for those taxes, he has suggested they should be lower than 35 percent.

“If you can get overseas money to come back here, even if it’s at a lower rate than the 35 it now comes back at, and you can use that money for a major constructive purpose such as infrastructure — if you did an infrastructure bank, for instance, you could get $100 billion in equity in the bank and get a trillion dollars of infrastructure,” Schumer told CNBC in an interview last month.

So instead of just making them pay the $720 billion or so that these tax-dodgers owe us, Schumer says maybe if we offer to let them keep up to $620 billion of that, maybe we “can get” (beg) them to pay $100 billion. He says, “you can use that money for a major constructive purpose.” Of course, we could also use the other $620 hundred billion he wants to hand them, too. But in his mind the US government apparently doesn’t have the power to just make them pay what they owe.

The giant, multinational, tax-dodging corporations and their “captured” members of Congress are trying to sell this giveaway as a way to fund infrastructure projects. But not everyone in Congress is captured by the giant corporate interests. The Hill notes:

But liberal lawmakers such as Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) strongly oppose taxing corporations’ foreign earnings at a lower rate than their domestic earnings.

In a speech last year, Warren called deemed repatriation at a significantly lower rate than 35 percent “a giant wet kiss for the tax dodgers.”

Sanders has introduced legislation that would pay for infrastructure investment by ending deferral on overseas earnings, but it would not change the tax rates for them. A budget proposal from the Congressional Progressive Caucus — which has more than 70 members, including Sanders — also calls for ending deferral without proposing corporate rate cuts.

Today’s Example

Qualcomm Technologies, Inc. has announced it will acquire Dutch company NXP Semiconductor for approximately $47 billion. The purpose of the acquisition is to take advantage of this deferral loophole to avoid paying $10 billion it owes in U.S. taxes.

WSJ explains, in Qualcomm Creating Subsidiary to Avoid NXP Tax Hit:

Semiconductor company Qualcomm is creating a new foreign subsidiary to buy Eindhoven, Netherlands-based NXP Semiconductors N.V., and avoid paying tax on its offshore cash.

… San Diego-based Qualcomm had $2.4 billion of cash and equivalents in the U.S., and another $28.6 billion offshore at the end of June, according to a filing with the Securities and Exchange Commission. The company doesn’t have to pay U.S. tax on the offshore cash, as long as it indefinitely reinvests the money offshore.

To keep all the cash outside U.S. borders, a new subsidiary based in Amsterdam, Qualcomm River Holdings B.V., is making the tender offer for NXP’s shares.

Should we do what Schumer is said to be proposing, and reward Qualcomm for this scheme to dodge another $10 billion of taxes?

The Election’s Example

Republican candidate Donald Trump brags that he is “smart” for using schemes to keep from paying taxes. This tax-break not only lets the giant, multinational corporations get away with doing what Trump did, it hands them a huge, beautiful reward for doing it.

Is this the example for the country? Trump approach to taxes: good. Companies and the rest of us who did the right and lawful thing and just paid the taxes we owe: stupid schmucks and losers.

Which Is Better For We The People?

See if you can guess which is a better deal for We the People:

● Get $100 billion for infrastructure projects while handing $620 billion of taxes owed us back to the giant, multinational, tax-dodging, lying, scheming, cheating corporations and their billionaire owners, thereby making companies that did pay their takes look stupid?

Or
● Get the full $720 billion these corporations owe us, to use for infrastructure projects, teachers and other things government does to make our lives and economy better, while upholding fairness and the rule of law?

(Hint, making these tax-dodging corporations pay what they owe is better for We the People. Giving them a $620 billion reward for dodging taxes is really, really good for the 1%.)

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