Steer Clear of Rewards for Corporate Tax Dodging

By Kelsey Denogeon. Kelsey, an Oregon native, owns Pieper Café in Portland and is a member of Main Street Alliance of Oregon.

Foster-Powell is a resurgent Portland neighborhood, but it can’t reach its full potential with dilapidated roads. That’s why I served on a committee to improve Foster Road, which is home to my café. It’s why I also want the federal government to keep partnering with state and local governments to invest in highway and bridge maintenance.

But making those kind of public investments is increasingly difficult when politicians don’t collect the revenue we’re owed by tax-dodging multinational corporations. And, yet, during the deliberations that led to the recent budget agreement in Washington, D.C., no one ever raised the need to close corporate tax loopholes.

It’s a shame, because closing just one big corporate tax loophole could raise around $600 billion.

Here’s the back story. American corporations owe U.S. taxes every year on all their profits from around the globe. (They get a credit for any foreign taxes paid.) But a loophole called “deferral” lets corporations avoid paying U.S. taxes on those earnings. This encourages corporations to move jobs and to stash their profits offshore instead of investing at home.

That’s why American corporations have piled up more than $2 trillion in untaxed offshore profits, with more added every day. Remarkably, Washington politicians are competing with each other to see who can give the sweetest deal to these tax-dodging corporations.

Instead of requiring them to pay what they owe, the White House has proposed a deeply-discounted rate of 14% for corporations to bring their sheltered profits back to the U.S., which would raise just $220 billion. Congressional Republicans want to go below 10%, as does Donald Trump.

This rush to reward offshore corporate tax dodgers is a good example of how backwards priorities have gotten in Washington. The needs of working families –whether it be for quality preschool, a secure retirement or safe highways—get short shrift while the desires of billionaires dominate the agenda.

If we collected the full amount owed by the offshore corporate tax dodgers, we could not only fill potholes, unclog highway logjams and strengthen bridges, but also attend to a lot of other pressing needs. For instance, we could fund humane and lasting solutions for the homelessness crisis in Portland and other American cities.

Requiring multinational corporations to pay what they owe would also remove an unfair advantage big corporations have over small businesses like mine. Thanks to deferral and other special breaks, taxation has become almost optional for many big corporations. Meanwhile, small business owners like me don’t hide our earnings in offshore tax havens. Our taxes become resources for the communities that helped build our success.

Small business owners know most corporations aren’t holding up their end of the bargain. A recent report released by the Main Street Alliance included a survey of over 1000 small business owners and found that over 70% feel that large corporations are paying less than their fair share in taxes.

The trouble is, corporate lobbyists have succeeded in distracting Washington from the real problem of unpaid corporate taxes. They have raised a complete non-issue: the corporate tax rate.

They claim that corporations are overtaxed, but it’s just not true. Because of all the deductions, credits and other special breaks in our corporate tax code, corporations actually pay much less than the 35% rate. In fact, many middle-class families pay a higher tax rate than the 13% average rate paid by corporations in one recent year, as reported by a government watchdog agency.

Even worse, dozens of big, profitable corporations have “opted out” of the federal income tax system altogether. Familiar names like Boeing, Verizon and General Electric paid nothing over a recent five-year period, according to Citizens for Tax Justice.

We don’t have overtaxed corporations. We have underpaying corporations. Applying the normal tax rate to all that offshore cash would be a good first step to rectifying that injustice. The U.S. Senate Finance Committee should ensure corporations pay their fair share to support the country that supported their success.

Those corporations should pay what they owe.

April 18, 2016 Posted in guest column.