House tax plan does not stop the gaming
Gary Kalman | 5/11/2017, 6 a.m.
It seems a misplaced goal to stop the booking of profits offshore as an end unto itself. It is not as though the majority of profits are actually held offshore — waiting to be brought back to this country. A Senate investigation found that half of the funds booked offshore are held in Treasuries or other U.S. investments. Rather, the issue is the lost tax revenue or, as most in the public would see it, tax dodging. Since tax dodging via tax havens and other methods would continue among the largest players, it seems misleading to say to the public that the House plan would end the gaming.
Our goal in tax reform should be to agree upon a corporate tax rate that helps the country cover our costs, and then minimize the unintended ways to avoid paying it.
The most straightforward and hardest to game among reform proposals is to leave the basic structure in place but end the ability for multinationals to defer paying the taxes they owe. Individuals pay taxes on money they earn, whether they earn it in Des Moines or Dublin. Small and wholly domestic businesses pay taxes, timely, on their earnings.
There is no economic justification behind the special treatment of multinationals. We should also tighten rules to prohibit inversions and ensure companies are playing by the rules by publicly reporting — country-by-country — their profits, taxes paid, and certain operations. This is a pragmatic, comprehensive and comparatively simple tax reform that solves the specific problem of lost revenue due to offshoring profits in tax havens.
Gary Kalman is executive director of the FACT Coalition, a nonpartisan alliance of more than 100 organizations working toward a fair tax system.