House Speaker Paul Ryan (R-Wis.) and Sen. Chuck Schumer (D-N.Y.), who will become majority leader if Democrats take the upper chamber, have been in talks to reform the tax code in 2017.
Multinational companies are under increasing pressure from tax authorities around the globe, with signs that the era of easy access to tax havens may be coming to an end. With few places left to turn, U.S. companies want to bring their cash home ― but they want to do it without paying the tax they avoided by stashing it offshore to begin with.
The pro-corporate narrative in Washington warns that if taxes aren’t cut, companies will go elsewhere. Warren said it’s a bluff, and recent activity around the globe suggests she’s right.
“Developed countries are cracking down on the tax dodgers. You saw what just happened with the European Commission ordering Ireland to collect $14 billion in back taxes from Apple,” she said. “Corporations are running out of places to hide, with the G20 and the OECD [Organization for Economic Cooperation and Development] working together to end international tax avoidance. So I just think that argument no longer holds much weight. Instead of bailing out the tax dodgers under the guise of tax reform, Congress should seize this moment to repair our broken tax code.”
Instead of bailing out the tax dodgers under the guise of tax reform, Congress should seize this moment to repair our broken tax code.One way to bring pressure on Congress, she told The Huffington Post in an interview, is for state ballot measures to show politicians where the people stand on that issue. One in particular she’s watching is Oregon’s Measure 97, a provision that would raise $3 billion a year by taxing companies with revenue of $25 million or more. Vermont’s independent Sen. Bernie Sanders recently threw his weight behind it.
“State ballot initiatives are sending a giant message to Congress that the American people want to see change,” she said. “I think this proposal is a good step to help make the system fairer.”
Instead of bailing out the tax dodgers under the guise of tax reform, Congress should seize this moment to repair our broken tax code. Sen. Elizabeth Warren (D-Mass.)
She was skeptical of claims that the true cost would be passed down to consumers to the tune of $600 per year per Oregon household. “I want to dig a lot deeper into those data because I worry about numbers that always seem to align with the interests of the billion-dollar corporations that want to escape paying their taxes,” she said.
For years, the bipartisan consensus around tax reform has agreed that any effort should be “revenue neutral,” meaning that the tax code would be rewritten, some companies would pay more, some would pay less, but the government would get the same revenue that it’s getting today.
But from the perspective of the Warren wing of the party, corporations pay far too little as it is, so making any reform revenue-neutral is a loser.
Before companies managed to start gaming the system, Warren noted, three of every 10 dollars of federal revenue came from corporate taxes. Today it’s only 1 in 10.
“At a time when corporate profits are near record highs, corporate tax revenue is near a record low,” she said. And so Democrats need to fight to push it higher.
“These giant companies haven’t just taken advantage of the tax breaks that have been offered to them, they haven’t just lobbied for better and better tax breaks, they’ve laid out the whole narrative about how America should think about corporate taxes,” she said. “The first priority to fix our broken tax code is to raise more revenue from big corporations.”