Washington, DC – Senator Sheldon Whitehouse (D-RI), Chair of the Senate Finance Subcommittee on Taxation, and U.S. Representative Lloyd Doggett (D-TX), Chair of the Ways and Means Health Subcommittee, cheered provisions in President Biden’s new American Jobs Plan that draw from their bill to end tax incentives for moving jobs and investment overseas at the expense of American workers and taxpayers. Whitehouse and Doggett’s bill, the No Tax Breaks for Outsourcing Act, would level the playing field for small businesses and domestic workers and generate significant revenue to cover the cost of rebuilding America’s crumbling infrastructure.
“I’m excited to see President Biden draw on our legislation to end incentives from the Republican tax scam that send American jobs and profits overseas,” said Senator Whitehouse. “We ought to help our workers and small businesses compete on an equal footing and ensure that big multinational corporations contribute their fair share in taxes. Our provisions to end tax breaks for foreign profits will help fulfill the President’s pledge to unwind Trump’s tax giveaways and generate substantial revenue to pay for this much-needed infrastructure plan. I look forward to working with the White House to make sure these fixes stop the ultra-rich and corporations from dodging taxes.”
“This plan corrects major deficiencies in both our infrastructure and our tax code,” said Congressman Doggett. “It’s about both highways and highway robbery of our Treasury as too many dodge their responsibility to pay for our national security and other vital services. President Biden is embracing major provisions of our No Tax Breaks for Outsourcing bill that I have long urged and which has now been cosponsored by over 100 House colleagues. This will remove Trump-GOP created tax incentives that encourage large, profitable multinationals to ship jobs and profits abroad. We can add more jobs here in America and insist that the profits earned from American consumers are taxed here to fund American initiatives, not hidden in some island tax haven. As large corporations pay their fair share, we can make the long needed infrastructure investments that will create even more good-paying, high wage jobs.”
The president’s plan draws on several key elements of Whitehouse and Doggett’s bill, including:
- Repealing the 10 percent tax exemption on profits earned from overseas tangible investments. In addition to the half-off tax rate on profits earned abroad, the Trump law exempted from tax entirely a 10 percent return on tangible investments, such as plants and equipment, made overseas. Whitehouse and Doggett’s bill would eliminate this get-out-of-taxes free card for companies that build factories overseas.
- Applying the tax on GILTI (global intangible low-taxed income), the minimum tax on foreign profits, on a country-by-country basis. The Trump tax law created incentives to shift profits to tax havens and invest in physical assets in higher-tax countries – often our economic competitors – instead of here in America. Applying GILTI on a country-by-country basis would significantly reduce these incentives.
- Repealing tax break for so-called “Foreign Derived Intangible Income (FDII).” This wasteful, economically inefficient tax break mostly rewards large companies for what they would have done in absence of the incentive. Furthermore, the fewer domestic assets a company holds here in the U.S., the larger this tax break, creating yet another offshoring incentive.
- Cracking down on inversions. President Biden’s plan calls for making it harder for companies to “invert,” a practice in which companies renounce their U.S. citizenship to avoid taxes. Whitehouse and Doggett’s legislation would discourage corporations from inverting by deeming certain mergers between a U.S. companies and a smaller foreign firms to be a U.S. taxpayers, no matter where in the world the new companies claim to be headquartered.
Specifically, the combined company would continue to be treated as a domestic corporation if the historic shareholders of the U.S. company own more than 50 percent of the new entity. If the new entity is managed and controlled in the U.S. and continues to conduct significant business here, it would continue to be treated as a domestic company regardless of the percentage ownership.
More details on the Biden American Jobs Plan are available here.
More details on the No Tax Breaks for Outsourcing Act are available here.
