AS THE economy slowly continues to regain its footing, several issues have become increasingly higher on Washington's agenda.
Many government officials are now looking for ways to boost the overall stability and balance sheet of the country. Several ideas have come across the desktops of our politicians. One of which would address an overhaul in corporate tax code to help eliminate potentially billions of dollars in untaxed dollars to escape our borders in tax havens.
Several countries have recently come under fire of these accusations for allowing this practice to happen, most notably Bermuda, the Cayman Islands, and recently Apple's choice of Ireland. Many of the biggest corporations in the United States avoid taxes by strategically setting up their balance sheets and accounting practices to avoid higher tax rates here.
Instead outsourcing certain subsidiaries, jobs, and offices to other countries to gain advantage of these technical loopholes.
Now that the U.S. Senate is preparing to undergo a comprehensive tax reform, U.S. Sen. Sherrod Brown (D-OH) announced his plan to increase the American competitiveness by overhauling corporate tax could to promote investment domestically to increase production and high-skilled jobs.
"Corporate tax reform is necessary to ensure the American economy is the most desirable place in the world for U.S. based companies to invest," Brown said. "We can do that by closing down tax havens that cost our country revenue and cost American workers jobs. Lowering the corporate tax rate would put companies on a level playing field with foreign competitors and reduce the incentive for them to shift jobs and profits overseas. Creating a global minimum tax rate will level the playing field, raise revenue, and prevent a global race-to-the-bottom."
Sen. Brown pointed out that with this reform, a fiscal security for the future is a must. In an ever-increasing globalized economy, U.S. multinational corporations book 40 percent of their profits in these overseas tax havens. Most of these entities contain less than 10 percent of foreign workers and foreign investments. One example, of the U.S. controlled foreign corporations, Bermuda represents 646 percent of our Gross Domestic Profits(GDP).
Brown's plan would be highlighted by an effort to simply a rather complex international tax system which fails to deter shifting domestic profits elsewhere. Two major points of Brown's plan including lowering the corporate tax rate and creating a global minimum tax rate.
If the United States corporate tax rate were competitive or average of other country's, it would present a level playing field for all while boosting competition amongst companies themselves. A country-by-country global minimum tax rate would also help close many of these offshore tax havens and eliminate incentives for tax arbitrage.
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