Washington, DC – Senator Sheldon Whitehouse (D-RI) and Congressman Lloyd Doggett (D-TX) welcomed the U.S Treasury Department’s new Made in America Tax Plan, a proposal containing central components of Whitehouse and Doggett’s No Tax Breaks for Outsourcing Act. The Biden administration American Jobs Plan, released last week, proposes to generate revenue by closing loopholes and incentives in the tax code that send jobs and profits overseas. The new Treasury tax plan fleshes out those proposals in greater detail.
The Treasury plan estimates the revenue generated by preventing outsourcing of jobs and profits would generate roughly $700 billion over the plan’s 15-year timeframe. Key provisions in Whitehouse and Doggett’s No Tax Breaks for Outsourcing Act are included in the Treasury plan.
“President Biden is right,” Senator Whitehouse said. “We need tax reform that’s fair; that closes loopholes for shipping jobs and profits overseas; and that ends the needless race to the bottom against other countries, which stifles investment in urgent priorities like infrastructure. I’m pleased to see the Biden administration draw from the approach Congressman Doggett and I proposed in Congress, and I look forward to working closely with the White House and Treasury Department to pass these ideas into law.”
“A compelling case to advance both sweeping infrastructure investment and American competitiveness,” said Congressman Doggett. “Removing perverse tax incentives that promote outsourcing American jobs and shifting to offshore tax havens profits from American sales, corporations would finally be required to pay a fair share. American leadership for a global minimum tax can end the destructive corporate tax race-to-the bottom around the world and the loss of so much stateless, untaxed corporate income. Most important to apply the Global Intangible Low Tax-Taxed Income (GILTI) tax on a country-by-country basis and repeal the Foreign Derived Intangible Income (FDII) tax break, which has served as an incentive for tax haven abuse rather than greater domestic production.”
The Treasury plan includes key elements of Whitehouse and Doggett’s bill, such as:
- 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. It adopts the approach taken in Whitehouse and Doggett’s legislation to discourage inversions by deeming certain mergers between a U.S. company and a smaller foreign firms to be a U.S. taxpayers, no matter where in the world the new companies claim to be headquartered.
More details on the Made in America Tax Plan here.
More details on the No Tax Breaks for Outsourcing Act are available here.
