“Obama’s call to fix the tax code so that corporations aren’t rewarded for keeping profits abroad is the right approach to tax reform, but the details matter. Right now, multinationals with armies of accountants exploit loopholes to make profits made in America appear on the books in tax havens.
“Businesses should succeed by being more productive and innovative, not by hiding profits in the Cayman Islands. Average taxpayers and small business owners end up covering the cost of the estimated $90 billion in revenue lost to tax havens each year.
“The President has previously proposed a minimum tax on foreign profits, but if companies can still get a big tax discount on money booked offshore, they’ll still exploit every loophole they can find to get that windfall. Whether this would work depends a lot on the size of the discount.
“If Obama’s tax plan fulfills its promise, it could provide badly needed funding for our transportation system. Transportation investments must reflect the fact that Americans are driving less, a trend U.S. PIRG research has documented in detail. America’s demand for more transit, high-speed rail, and modes of transportation that reduce traffic while curbing air pollution is only increasing.
“The president’s proposal shouldn’t be conflated with the wrong-headed approach of legislation authored by Rep. John Delaney and introduced in the Senate by Sens. Michael Bennet and Roy Blunt. This bill purports to finance infrastructure investment by giving multinationals with profits booked offshore a massive tax holiday. It’s been well documented that tax holidays lead to more tax dodging, yet the Delaney bill does nothing to end incentives to shift profits offshore in the future. Investing in modern public transportation and fixing our roads and bridges is critical, but not at the expense of more tax dodging, which would ultimately undermine our ability to build the 21st century transportation system we need.
“Congress should waste no time in filling in the details of the President’s plan. America can’t afford leave gaping offshore loopholes open, and can’t wait any longer to invest in 21st century public transportation.”