WASHINGTON — The Coalition for a Prosperous America (CPA) today released a statement on legislative efforts to resolve multinational tax avoidance that plagues the U.S. Treasury and puts U.S. domestic companies at a significant disadvantage to multinational competitors. Specifically, CPA supports reforms to the U.S. corporate tax system that prohibit tax avoidance through the book tax, a process that allows multinational corporations to report profits to shareholders, but report entirely different profits to the U.S. government.
“As Congress continues to consider changes to the U.S. corporate tax system in the reconciliation legislation, it is critical that lawmakers address this double standard that allows stateless multinationals to avoid taxes that domestic companies have to pay to the U.S. government,” said Michael Stumo, CEO of CPA. “Multinational corporations should not be allowed to avoid taxes by reporting one set of books to their shareholders and another set to the IRS. Putting an end to this tax avoidance scheme would be a welcome reform and bolster efforts to put American companies on an even playing field with their foreign competitors. Additionally, CPA supports efforts to ensure the unitary treatment of corporate profits. Corporations should not be able to use paper tax games between their subsidiaries to shift profits and avoid paying taxes. Implementing Sales Factor Apportionment would end the game of multinational profit shifting by requiring corporations to pay taxes where they make their profits.”
Last month, CPA released a statement regarding closed door negotiations in the Organization for Cooperation and Economic Development (OECD) on how to resolve multinational tax avoidance that plagues the U.S. Treasury and puts U.S. domestic companies at a significant disadvantage to multinational competitors. CPA has long called for ending tax avoidance by implementing Sales Factor Apportionment (SFA), which would tax profits based on the location where the product was sold.