June 24, 2016
Republicans Rollout Substantial Tax Giveaway to Corporations and the Wealthy
Party Remains Tone-Deaf to Popular Concerns About Income Inequality; Blueprint Slashes Rates for Corporations and Wall Street Investors
WASHINGTON, D.C. – New legislation unveiled by Republicans in the U.S. House of Representatives represents a windfall for the superrich and big corporations, Public Citizen said today. House Speaker Paul Ryan (R-Wis.), Ways & Means Chairman, and Chair of the Republican Tax Task Force Kevin Brady (R-Texas), released a tax blueprint that, though lacking in many details, will belatedly be sorted out at some later date when the Ways & Means Committee drafts implementing legislation.
“Instead of specifically closing tax loopholes that exclusively benefit the wealthy – hedge fund and private equity investors – such as the carried interest loophole, the Republican plan is a failing plan that cuts capital gain rates and further fills the pockets of fat cats on Wall Street,” said Bartlett Naylor, financial policy advocate for Public Citizen’s Congress Watch division. “Public Citizen and dozens of other groups have joined together in the Take on Wall Street campaign to urge Congress to pass policies that include closure of the carried interest loophole as one way to decrease income inequality, but apparently Republicans remain oblivious to public sentiment clamoring for an economy that is no longer rigged in favor of the more fortunate among us.”
In addition to reduction of the top capital gains tax from around 20 percent to 16.5 percent, other elements of the tax blueprint also would further benefit the wealthiest members of society, for example by repealing the estate tax. The statutory corporate tax rate also would drop from 35 percent to 20 percent, and the blueprint would provide more incentives for multinational companies to use profit-shifting mechanisms to shift profits to offshore subsidiaries by instituting a territorial tax system and one-time tax on those profits at 8.75 percent on cash-like assets and 3.5 percent for less liquid investments.
“Multinational corporations owe around $700 billion on the $2.4 trillion that is currently booked offshore, and instead of paying what’s due to the American people, the tax blueprint revisits the failed experiment of a ‘repatriation holiday.’ It didn’t work in 2004 and there’s no reason to think it would work in 2017,” said Susan Harley, deputy director of Public Citizen’s Congress Watch division. “It’s illogical to think that corporations will be satisfied with a 20 percent tax rate when tax havens with zero percent taxes remain, beckoning companies to invest in aggressive tax planners and wily accountants instead of paying their fair share of the cost of services to benefit the American public.”
The blueprint also ignores policies to raise revenues by taxing Wall Street trades. This move would have shown that Congress takes seriously the need to address college affordability in the United States. Poll after poll shows that the American public opposes more tax breaks for the top one percent.
“We are somewhat enticed by the possibility that the plan may lead to closing the CEO bonus loophole, but we also are aware that the devil is often in the details,” said Naylor. “Public Citizen and the rest of our partners in the Take On Wall Street campaign will push to ensure that a provision to close this loophole is included in the final legislation.”