Today, President Barack Obama released the budget for what will cover his last year in office.
Even though he called for a greater emphasis on “middle-class economics” during the State of the Union address, the president’s budget does not go far enough to make sure that Wall Street and corporations pay their fair share of the cost of government. Notably missing from the budget is a strong stance on closing international tax loopholes and an important tax on stock, bond and derivative trades.
President Obama’s budget addressed the problem of international tax loopholes, but only partially. Though he proposed repatriating corporate profits stashed offshore, he should have proposed bringing these taxes back at a much higher rate. The 14 percent he proposed for immediate taxation to fund infrastructure investments is much too low, since multinational corporations have been milking a bevy of tax breaks for years. Though the president proposes taxing future overseas profits at 19 percent, and compared to the current statutory rate of 35 percent, that’s still leaving a lot on the table of the $2 trillion of profits estimated to be stashed offshore.
Granted, Obama’s 19 percent repatriation proposal is itself stronger than what U.S. Sens. Barbara Boxer (D-Calif.) and Rand Paul (R-Ky.) recently unveiled — a plan to shore up the depleted Highway Trust Fund by repatriating offshore taxes at the bargain-basement rate of only 6.5 percent. The 2015 bipartisan infrastructure reparation proposal is only slightly more than 1 percent higher than the 5.25 percent rate used in the well-documented failure of a similar experiment in 2004. Boxer and Paul’s 2015 proposal is a revenue loser, similar proposals are expected to cost in the range of $100 billion over 10 years, according to the Joint Committee on Taxation. Repatriation holidays such as these are major giveaways that will reward corporations that have for years avoided paying taxes by using accounting gimmicks to shift profits to the books of related foreign corporations.
The president could have done so much more to raise revenue. One glaring absence: a tax on Wall Street financial transactions. Similar to the 0.1 percent “high-roller fee” recently proposed by U.S. Rep. Chris Van Hollen (D-Md.), the president could and should have championed this commonsense idea to make tens of billions a year in revenue while slowing down volatile high-speed trading, which helped lead to the May 2010 “flash crash.”
More than 18,000 Public Citizen members and supporters have signed a petition calling on President Obama to include such a financial transaction tax on Wall Street trades in his budget. Though it didn’t make it this time, the president must still take leadership on this important issue. It doesn’t make sense to ignore this commonsense financial reform, and we urge him to support it as stand-alone policy.
That’s why we’re asking all Americans who want to see multinational corporations and Big Banks pay their fair share to share the image above and urge the president to join the growing wave of leaders calling for a tax on Wall Street.
Just share this image on your social media accounts like Facebook and Twitter using the hashtag #WallStreetTax and link to this blog post so that others can learn more about how President Obama could do more to make sure big corporations no longer dodge taxes and to rein in out of control Wall Street trading.
Susan Harley is the deputy director of Public Citizen’s Congress Watch division.