The Stop Tax Haven Abuse Act (S. 1533) would raise about $220 billion over the next decade by closing tax loopholes that encourage U.S. corporations to move jobs, profits and operations offshore and allow them to not pay their fair share of taxes. As my colleague has noted, these costly tax breaks are undermining our ability to invest in the foundations of economic opportunity – an educated workforce, research and development, and healthy families. Across the board cuts, known as sequestration, are taking their toll in North Carolina and closing corporate tax loopholes is the best way to replace a second round of cuts.
Here is just one example of a company that would no longer be able to benefit from tax loopholes if the Stop Tax Haven Abuse Act is passed.
Brothers Charles and Sam Wyly — who have included among their holdings for almost 25 years the arts-and-crafts chain Michael’s — crafted several artful offshore schemes to avoid paying their fair share of taxes. They set up 58 trusts and corporations in well-known tax havens like the Isle of Man. Despite maintaining effective control over all investment decisions, the Wylys claimed for tax purposes that these were independent entities, according to a U.S. Senate PSI investigation.
The Stop Tax Haven Abuse Act would make such tax avoidance very difficult by strengthening existing laws against offshore tax avoidance, expanding disclosure requirements, increasing penalties, and better screening for the sources of cash repatriated to America from offshore entities.[i]
[i] Levin, Sections 102, 104, 202, 203 and 204.