WASHINGTON — The Coalition for a Prosperous America (CPA) today released a statement on provisions within the House-passed Build Back Better Act (H.R.5376) that seek 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, the reforms in the legislation would change the current international corporate tax system by creating a global minimum rate atop creating a 15% minimum tax on all large companies based on their financial-statement income. This part of the bill represents a positive step towards eliminating the ability of multinational companies to avoid paying U.S. corporate tax by shifting profits or production offshore to tax havens.
“For too long, American companies have been at a distinct disadvantage to multinational corporations that use an army of lawyers and tax accountants to shift profits to tax havens and avoid U.S. taxes,” CPA Chair Zach Mottl said. “Some of these changes to the international corporate tax system will put domestic producers — like my family company, Atlas Tool Works — on a more even playing field as foreign competitors. Importantly, targeted changes address the flaws in the current system that have incentivized the offshoring of profit and production for decades.”
Earlier this month, CPA applauded efforts to reform 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.
“Boosting domestic production by ending the ability of stateless multinationals to avoid U.S. corporate taxes is a smart recipe for halting the offshoring of production and profits outside of the U.S.,” said Michael Stumo, CEO of CPA. “CPA welcomes efforts to end the game of multinational profit shifting, while small and mid-size enterprises, and other domestic producers, are unfairly forced to carry their full tax burden.”
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. The negotiations have two separate parts. Pillar One seeks to reallocate some tax revenue from where multinationals book profits to where they have sales. Pillar Two aims to create a global minimum corporate rate. CPA is the leading national, bipartisan organization representing exclusively domestic producers and workers across many sectors of the U.S. economy.