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Small Business Leaders Urge Closing of Corporate Tax Haven Loopholes

Washington, D.C. (December 14, 2012)

By Michael Cohn

Hundreds of business leaders who are part of a trio of advocacy groups have signed a letter calling on Congress and President Obama to close corporate tax haven loopholes that cost the U.S. Treasury $100 billion a year.

The letter urges the Obama administration and Congress to reject “revenue neutral” corporate tax reform in a fiscal cliff deal that would have the effect of essentially locking in today’s historically low levels of corporate tax receipts. The business leaders encouraged lawmakers and the President to restore tax revenues lost to corporate tax avoidance and resist lobbying by CEOs to create a territorial tax system that would reward corporations for shifting more U.S. profits and jobs overseas.

The letter was sent by three advocacy groups—the American Sustainable Business Council, Business for Shared Prosperity and the Main Street Alliance—to Congress and the President Friday, saying they “want a tax system that is fair and provides sufficient revenue for the public services and infrastructure that underpin our economy. When powerful large U.S. corporations avoid their fair share of taxes, they undermine U.S. competitiveness, contribute to the national debt and shift more of the tax burden to domestic businesses, especially small businesses that create most of the new jobs.” A total of 626 business owners and executives have signed the letter.

“We need to stop the gaming of the tax system by large corporations, which undercuts small business and our whole economy,” said Lew Prince, a St. Louis small business owner and leader in Business for Shared Prosperity who recently met with President Obama at the White House. “With corporate profits at 50-year highs and corporate taxes at 50-year lows, the last thing we need is to freeze corporate taxes at this low level through revenue neutral corporate tax reform,” said Prince, managing partner of Vintage Vinyl, the Midwest’s largest independent music store. “There’s nothing neutral about big business tax dodging. It’s unpatriotic plain and simple.”

“Like most small business people, I get frustrated when I hear about big multinational corporations using accounting tricks to shift profits they earn in this country to some foreign tax haven, just so they can avoid their responsibility to pay their fair share,” said ReShonda Young, operations manager of Alpha Express, Inc., a family business that provides 24-hour local, regional and national delivery service, based in Waterloo, Iowa, and a leader in the Main Street Alliance network. “We’re not afraid to compete with the biggest delivery companies out there, but it needs to be a fair fight, not one in which big corporations use loopholes to avoid their taxes, stick our business with the tab, and rob our nation of the resources we need for a healthy economy.”

“Congress and the President should seize this unique moment to adopt smart tax policies that move our economy forward,” said Mitch Rofsky, CEO of Better World Club, and a board member of the American Sustainable Business Council. “We don’t need more old-line, self-defeating policies that send jobs overseas. Congress should change the tax code so that small businesses can compete on a level playing field with big corporations. This will make the economy more sustainable for all people and businesses.”

Last year, corporate taxes accounted for less than 8 percent of federal tax revenues, down from 32 percent in 1952. Nine out of 10 small business owners said it is a problem that U.S. multinational corporations use accounting loopholes to shift their U.S. profits to offshore subsidiaries to avoid taxes in a scientific nationwide poll released earlier this year. In the same poll, two-thirds of small business owners said big corporations do not pay their fair share of taxes.

In their letter, the business leaders called for tax reform guided by three principles:

First, all businesses—large and small—should contribute responsibly toward the costs of government and the well being of the economy. … Our nation cannot afford “revenue neutral” corporate tax reform that leaves corporate taxes as a share of our economy at historically low levels.

Second, businesses should not be rewarded for shifting jobs and investment overseas or disguising U.S. profits as foreign profits to reduce their taxes. ... Our government should reject demands by U.S. multinationals for a tax holiday to “repatriate” the funds they shifted offshore to avoid paying taxes. … We also oppose changing to a “territorial” tax system, which would accelerate the use of accounting manipulation to shift domestic profits to foreign tax havens, permanently rewarding those who shirk their taxpaying responsibilities.

Third, by ending unproductive tax loopholes and subsidies benefiting large corporations, we can level the playing field and raise revenues needed to restore economic vitality. ... A transparent corporate tax system that assures all companies pay for the services upon which our businesses, our customers, our workforce and our communities depend, would help restore the economic vitality and domestic job creation we all seek.

2 Comments

Sounds good!

Posted by: TaxElitism | December 19, 2012 1:09 PM

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Sounds good! Society is pulling the wool from its eyes!

Posted by: TaxElitism | December 19, 2012 1:05 PM

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