WASHINGTON — The Coalition for a Prosperous America (CPA) today released a statement in support of the 15% Corporate Alternative Minimum Tax (CAMT) included in the Inflation Reduction Act. The CAMT would impact multinational corporate groups that have $1 billion in yearly profits over an average of three years and do not pay at least 15% in effective tax rates. These multinational corporations are the largest tax avoiders and have offshored production and jobs for decades. In addition to using credits and deductions that are available to all U.S. domestic firms, these multinational entities offshore profits to tax havens, giving them a distinct advantage over U.S. domestic manufacturers.
In order to boost domestic production and employment, the U.S. tax code must protect domestic manufacturers and close loopholes that put them at a disadvantage to multinational corporations. Domestic producers often pay double—or more—in federal taxes compared to large multinationals that have offshored production and shift profits to tax havens. While only a first step, the CAMT reduces the difference in what domestic corporations pay and what their offshoring competition pays to the IRS.
For example, the Internal Revenue Service (IRS) documented how Amgen underreported its taxable income by nearly $24 billion from 2010 to 2015 by inappropriately attributing what the agency says should have been U.S. profits to a Puerto Rico subsidiary that oversees manufacturing of the company’s drugs. In 2020, over 75% of pharmaceutical giant AbbVie’s sales were in the U.S. market, yet only 1% of AbbVie’s income was reported in the U.S. for tax purposes. AbbVie’s ability to exploit subsidiaries in offshore tax havens to avoid paying billions of dollars in taxes on U.S. prescription drug sales signals a clear need to reform the international tax code. AbbVie has continuously paid an effective tax rate that is less than half the U.S. corporate tax rate of 21%. In 2020, a CPA report showed that global multinational companies paid an effective tax rate of around 9% in 2019.
“Opponents of the CAMT are shamelessly doing the bidding of multinational corporations that shift profits overseas and that have offshored production and jobs to foreign nations,” said Michael Stumo, CEO of CPA. “The CAMT is an anti-offshoring reform to the tax code that will level the playing field for American manufacturers that have been at a stark disadvantage to multinationals for decades and that often face a federal tax rate that is more than double what their foreign competitors pay. According to our data, the only companies that can consistently get below a 15% tax rate are multinational entities that shift profits to tax havens and offshore production, labor, and investment. CPA is proud to support the companies and workers that are committed to producing in America—and the CAMT will be a win for American manufacturers.”
Read more from CPA on how the CAMT helps fix discrimination against domestic manufacturers.