Rep. John Delaney (D-MD-6) introduced two infrastructure funding bills (H.R. 1669 and H.R. 1670) yesterday which would further incentivize corporate tax dodging, reward the biggest multinational corporations for stashing their profits in offshore tax havens, and replace one system riddled with tax loopholes with another.
“Funding infrastructure is a worthy goal, but Rep. Delaney’s bills strike a bad deal for little return,” said Michelle Surka, advocate with U.S. Public Interest Research Group. “By offering up huge tax breaks for the biggest multinational corporations and rewarding tax gimmicks, these bills sell small businesses and future funding for infrastructure down the river.”
The first bill, the Partnership to Build America (H.R. 1669), would establish an infrastructure bank funded by profits repatriated from offshore tax havens. This proposal, however, offers the worst tax avoiders a costly and unwarranted tax holiday, essentially rewarding and further incentivizing tax haven abuse.
Under this proposal, multinational corporations would be allowed to bring back up to $6 at a zero percent tax rate for every $1 in bonds purchased, with the exact ratio to be determined by an auction. The proposed bidding process would open the door to gaming and collusion. The bonds would further reward tax-dodging multinationals by paying them interest. Contrary to proponents’ claims, the bonds would not offer a cost-free way to capitalize an infrastructure bank. The bill instead offers multinationals a tax cut worth up to $105 billion to capitalize a $50 billion bank.
The Infrastructure 2.0 Act (H.R. 1670) would allow multinational companies to repatriate their existing offshore profits at a tax rate of 8.75 percent — lower than even the 10 percent rate proposed by President Trump. That means profitable U.S. corporations subject to the statutory tax rate of 35 percent would get a 75 percent reduction in the tax rate applicable to their foreign earnings — a massive tax break unavailable to any domestic U.S. company or individual U.S. taxpayer. Further, this bill would also set a deadline for Congress to act on corporate tax reform, and if that deadline is not met, a set of a new rules would be enacted that would, in effect, simply modify and extend the worst tax loopholes
“With over $2.5 trillion in corporate profits booked offshore, we could most certainly fund badly needed infrastructure with the taxes owed on money stashed in tax havens,” said Surka. “But doing so should not further incentivize or reward tax gaming. Rep. Delaney’s bills do just that, and they take us in the wrong direction.”
Find Rep. Delaney’s press release here.