CEOs with the dubious lobby group “Fix the Debt” are pushing for cuts to Social Security, Medicare, and the social safety net, painting themselves as the good guys in the budget debate. But as they ask for everyday Americans to accept cuts, these CEOs are brazenly seeking to widen tax haven loopholes that would benefit their corporations such as a “territorial” tax system — and earn them billions.
A new report by the Institute for Policy Studies shows that Fix the Debt member corporations stand to gain as much as $173 billion in windfalls if Congress adopts their proposal for a territorial tax system.
The Fix the Debt campaign is a heavily-funded corporate lobby group pushing for cuts to Social Security and Medicare and more corporate tax breaks. One of their main goals is a “territorial” tax system. This reform would increase incentives to exploit tax havens by permanently exempting U.S. corporations’ foreign earnings from U.S. federal income taxes. Fix the Debt Co-Founders Erskine Bowles and Alan Simpson made this reform a centerpiece of their recently released deficit reduction proposal. The House Ways and Means Committee will hold a hearing on Thursday, June 13, to examine multinational corporations’ use of low- or no-tax countries to shift profits offshore to avoid paying U.S. taxes.
KEY FINDINGS FROM THE REPORT:
- The 59 Fix the Debt member corporations that reported their offshore profits had a combined total of more than $544 billion at the end of 2012, up from $473 billion in 2011. The average offshore stash per company rose 15 percent last year to $9.4 billion.
- Currently, these profits are not subject to U.S. corporate income taxes unless they are brought back to the United States (also known as “repatriation”). If Congress adopts Fix the Debt’s proposed territorial tax system, these 59 companies would stand to win as much as $173 billion in immediate tax windfalls.
- The biggest potential winner is General Electric, which could reap a tax windfall of as much as $38 billion on its overseas earnings stash of $108 billion.
- The Fix the Debt member with the largest increase in offshore untaxed profits in 2012 among firms with more than $1 billion in offshore profits was Honeywell, with a 43 percent increase to $11.6 billion in 2012.
- Twenty-two firms reported increases of more than 20 percent in their untaxed offshore profits last year.
This is the latest in a series of IPS exposés on the Fix the Debt campaign. Previous reports include:
Fix the Debt CEOs Enjoy Taxpayer-Subsidized Pay
A Pension Deficit Disorder: The Massive CEO Retirement Funds and Underfunded Worker Pensions at Firms Pushing Social Security Cuts
Inequality in the Social Security Debate
The CEO Campaign to Fix the Debt: A Trojan Horse for Massive Corporate Tax Breaks