Feb. 7, 2012 - Statement of U.S. PIRG Tax and Budget Associate Dan Smith on the introduction of the Cut Unjustified Tax Loopholes Act (CUT Loopholes Act, S.2075) by Senators Carl Levin and Kent Conrad.
The CUT Loopholes Act goes a long way in making sure corporations play by the same rules as ordinary taxpayers. Our tax code is currently riddled with loopholes that serve no public purpose and allow wealthy special interests to shift their tax burden to the rest of us.
The CUT Loopholes Act tackles offshore tax havens that allow many large U.S. companies to shift American profits offshore to avoid paying taxes on income legitimately earned in the United States. These companies benefit from our educated workforce, large markets, and infrastructure. They should not be able to deploy armies of well-paid tax attorneys to shift profits legitimately made in America onto the books in the Cayman Islands.
At least 83 of the top 100 publically traded American companies use tax havens, according to the Government Accountability Office (GAO). All told, the Senate Permanent Subcommittee on Investigations found that tax haven abuse costs taxpayers $100 billion every single year. When companies use offshore gimmicks to dodge taxes, the rest of us must pick up the tab in the form of higher taxes, cuts to public programs, or more debt."
This legislation also closes a lucrative tax loophole that lets companies that grant stock options to their executives deduct more than the stock value reported on their books at the time. It's the only ‘expense' a company can use to lower its tax bill without having to spend any money. Closing the stock option loophole would save $25 billion over the next decade according to the bipartisan Joint Committee on Taxation.
With Congress looking for ways to cut the deficit, our elected leaders should approve the CUT Loopholes Act to make the tax code fairer while saving American taxpayers $155 billion over the next ten years.
U.S. PIRG, the federation of state Public Interest Research Groups, is a non-profit, non-partisan public interest advocacy organization.
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