NC Budget and Tax Center

Banning the box can help end corporate tax dodging, improve US economy

As I explained in this space yesterday, the federal budget process would become a bit more stable and predictable if the recently introduced Stop Tax Haven Abuse Act is enacted. This bill would raise at least $200 billion over the next 10 years by closing corporate tax loopholes that enable multinationals to shield their offshore profits from taxation. Once federal lawmakers deal with the current budget shutdown, the passage of this act would deliver a more balanced approach to addressing the federal deficit. Above all, it would prevent a second round of across-the-board cuts that will only further harm the nation’s most vulnerable citizens at a time when hardship remains high.

One of the four major reforms within the bill is to repeal the “check the box” rule that allow companies to use offshore subsidies as a front to avoid paying their fair share of taxes, saving an estimated $78 billion. Currently, businesses can make offshore subsidiaries and their passive income invisible for tax purposes. Passive income—which is income from sources that doesn’t require active management such as from interest, dividends, and royalties—is supposed to be taxed immediately whether on US soil or abroad. Yet, businesses can more or less check a box on an IRS form to make offshore subsidiaries and their taxable income vanish from their tax bill. The bill would end such practice by closing this loophole.

Check back later this afternoon to learn how Apple is checking the box and skimping on the taxes they owe.  Meanwhile, check out my colleague’s profile of the Wyly brothers who are notorious for using offshore schemes to dodge their fair share of taxes.

Check Also

Redesigning TANF to lift more families out of poverty

The 1996 welfare law that created Temporary Assistance ...

Top Stories from NCPW

  • News
  • Commentary

When the N.C. Senate elected Tom Fetzer to the UNC Board of Governors in March, it was widely seen a [...]

The 12 minutes spent on the phone with Duke Energy customer service shed no light on how — or if — c [...]

Crumbling ceilings. Failing air conditioning and heating systems. Broken down school buses. Mold inf [...]

This story has been updated with comments from Jim Womack, who did not respond earlier to questions. [...]

Last week, the General Assembly announced which legislators will serve on the Joint Legislative Task [...]

The latest effort in Washington to repeal and not actually replace the Affordable Care Act has a dif [...]

Conservative group “reviewing” bigoted attacks; funding from major NC corporations implicated Nearly [...]

5---number of days since Senators Bill Cassidy and Lindsey Graham unveiled a new proposal to repeal [...]

Featured | Special Projects

NC Budget 2017
The maze of the NC Budget is complex. Follow the stories to follow the money.
Read more


NC Redistricting 2017
New map, new districts, new lawmakers. Here’s what you need to know about gerrymandering in NC.
Read more