US Senators Bernie Sanders (I-Vt.) and Brian Schatz (D-Hawaii) today introduced a tax bill designed to curtail multinational corporation tax avoidance.
“Here’s the simple truth. You can’t be an American company only when it benefits you. You also have to be an American company when it comes to paying your fair share of taxes,” Sanders said.
The Corporate Tax Dodging Prevention Act of 2017 would end deferral and impose immediate US taxation of company profits currently held offshore at the full 35 percent tax rate (allowing a foreign tax credit).
The bill provides that foreign tax credits generated by profits earned in one country could not be used against US income tax on profits earned in another country.
Further, under the bill, a corporation could not claim to be foreign if its management and control operations are located in the US.
New rules would limit inversions by continuing to impose US taxation for a merged inverted company if it is majority owned by the owners of the US party to the merger or acquisition.
Interest deductions of US affiliates of foreign-owned multinationals would also be cut back.
Further, large oil companies would be prevented from disguising royalty payments to foreign governments as foreign taxes qualifying for the foreign tax credit.
According to Sanders, the legislation would raise at least $1 trillion in new revenue over the next decade.
Rep. Jan Schakowsky (D-Ill.) introduced a companion bill in the House.