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President’s Budget Should Be Stronger on Corporate Tax-Dodgers and Wall Street High-Rollers

Feb. 2, 2015

President’s Budget Should Be Stronger on Corporate Tax-Dodgers and Wall Street High-Rollers

Statement of Susan Harley, Deputy Director, Public Citizen’s Congress Watch Division

Note: Today, President Barack Obama released his FY 2016 budget. Among other measures, the president’s budget includes a tax on overleveraged big banks. The budget also requires giant corporations to repatriate profits earned overseas – at a discounted tax rate.

The president’s budget does not go far enough to make sure that Wall Street and other corporations pay their fair share. For example, it should have taken a stronger stance on closing international tax loopholes and proposed a tax on stock, bond and derivative trades.

The president proposed a one-time, 14 percent “transition toll” to immediately tax overseas profits, a major giveaway that will reward corporations that have for years avoided paying taxes on the collective $2 trillion in profits currently stashed offshore under deferred taxation. A 19 percent rate moving forward still provides an incentive for American companies to use accounting gimmicks to shift profits to the books of related foreign corporations.

While the president’s budget takes key steps in the right direction to rein in big banks by proposing a 7 basis point tax on the liabilities of banks with more than $50 billion in assets, he could and should have proposed to raise additional revenue by taxing Wall Street financial transactions directly. Similar to the 0.1 percent “high-roller fee” recently proposed by U.S. Rep. Chris Van Hollen (D-Md.), the president should have included 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 the president to include such a financial transaction tax on Wall Street trades in his proposed budget.  Though it didn’t make it in today, the president should still become a champion of this important issue.