President Barack Obama last week called on Congress to close tax loopholes that allow some corporations to avoid paying their fair share of taxes at the expense of hardworking Americans.
Congress must act now to close a loophole that could allow corporate tax dodgers to walk away with $34 billion over the next 10 years.
This money could help make our future workers more competitive by investing these funds in education opportunities, from pre-K to post-grad. This money could be used to create jobs by investing in roads and bridges that are desperately in need of repair. This money could help experts find the next cure by expanding biomedical research at the National Institutes of Health.
Instead, companies that use highly skilled American workers, transport their goods over our aging infrastructure and benefit from technological advances fueled by federal government investments are moving their headquarters overseas — in name only — in order to lower their taxes.
The process, known as inversion, amounts to a company renouncing its corporate citizenship and turning its back on American taxpayers.
A surge of inversion announcements last year led Democrats in the Senate and House to introduce several different measures to stem the tide. Republicans in both chambers refused to support the legislation even though similar measures received bipartisan support in the past.
In September, the administration put these corporations on notice when it announced a series of measures to crack down on the growing trend. But these proposals were limited, and Treasury Secretary Jacob J. Lew urged immediate action from Congress to stop the flow.
While some companies have continued to move forward with these schemes, others reversed course and chose to stay. Those companies, including Walgreens, should be commended for making not only the right decision for every taxpayer in America, but what we believe was also the right decision for its customers, employees and shareholders.
This wasn’t the first time Congress acted to curtail these transactions. In 2004, a Republican-controlled House and Senate changed the tax code to discourage U.S. companies from acquiring smaller foreign companies and moving their tax home to a foreign jurisdiction as part of the overall transaction.
In the past 10 years, more than 40 U.S. corporations have found a loophole in this law and have exploited it to pad their bottom lines.
And that’s why we introduced legislation in the Senate and the House — to finish the job we started in 2004.
Some say this action is unnecessary; that we can stop corporate inversions through comprehensive tax reform that reduces the overall burden on businesses.
We say: This can’t wait.
There is no realistic tax reform proposal that would reduce U.S. corporate tax rates to a level that could compete with countries that have essentially zeroed out their tax rates. Nor would we want to compete in a race to the bottom.
We need to reform our tax code so it works better for middle-class families and small businesses, but these changes won’t happen overnight. In the meantime, we must eliminate this glaring loophole once and for all.
None of us are allowed to live here, using the roads and bridges, benefiting from food safety inspectors, receiving protection from the local police and then claim we live in some tax haven in order to avoid paying taxes.
If a company benefits from everything the United States and its citizens have to offer, it should be paying its fair share. We urge our Republican colleagues in both chambers to take up this legislation immediately to close this tax loophole and help hardworking Americans.
Sen. Richard J. Durbin is a Democrat from Illinois; Sen. Jack Reed is a Democrat from Rhode Island; Rep. Sander M. Levin is a Democrat from Michigan; and Rep. Lloyd Doggett is a Democrat from Texas.