After a lot of talk by a lot of people, a set of three pieces of inversion legislation has finally been introduced in the House by U.S. Rep. Mark Pocan (WI-02).
Announcing the introduction of the trio of bills, Rep. Pocan said that “Enough is enough. This legislation will stop corporate deserters from abusing the U.S. tax system.”
Bold words, and now all he has to do is get the bills through the House and Senate and past the President’s desk – with the 2014 midterm elections just round the corner.
Let’s put aside the question of what’s going to happen for now, because nothing much is going to happen. Instead, let’s just look at what’s in the legislation.
These are the three bills:-
- Corporate Fair Share Tax Act (H.R. 5444);
- Putting America First Corporate Tax Act (H.R. 5443); and
- Corporate Transparency and Accountability Act (H.R. 5442)
The first one (Corporate Fair Share Tax Act - H.R. 5444) cracks down on earnings stripping where the U.S. operations of a multi-national company are loaded up with debt owed to the foreign affiliates. The high interest on debt paid by the company to itself allows it to claim deductions that wipe out its U.S. tax liability.
Making H.R. 5444 law would raise $48.6 billion in additional tax revenue over the next ten years.
The second one (Putting America First Corporate Tax Act - H.R. 5443) would change Section 956 of the tax code so that controlled foreign corporations to pay U.S. taxes on future active income.
This means that corporations would be unable to hoard overseas earnings outside without paying tax on it until they actually repatriate it into the U.S. at a convenient time through dividends and other means that help them save on the tax that would otherwise be owed.
Making H.R. 5443 law would raise $114 billion in additional tax revenue over the next ten years.
The third one (Corporate Transparency and Accountability Act – H.R. 5442) would restore a rescinded part of the tax code that required corporations to disclose pre-tax profits as well as the actual amount paid in state and federal taxes.
This bill would also require that all this information be publicly available on the SEC website and must be easily searchable, downloadable and sortable.
Photo credit - Allison Harger/Flickr