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New Bill: No Federal Contracts for Companies that Renounce American Corporate Citizenship to Dodge Taxes
Statement of Illinois PIRG Tax and Budget Advocate Dan Smith on the introduction of the No Federal Contracts for Corporate Deserters Act, introduced by Senators Richard Durbin and Carl Levin in the Senate, and Reps. DeLauro and Doggett in the House.
“Changing your address on a piece of paper shouldn’t change your tax bill. Unfortunately, a loophole in our tax code allows American companies to renounce their American corporate citizenship to avoid paying U.S. taxes.
“This loophole should be fully closed, but at the very least, lawmakers shouldn’t reward this tax dodging gimmick by granting these companies federal contracts.
“Companies that invert continue to benefit from what makes America one of the best places in the world to start a company and do business. These companies aren’t changing where they actually conduct business. It is only when it comes to paying the tax man that an inverted company displays its foreign corporate citizenship papers. Average taxpayers and small businesses end up footing the bill through higher taxes, cuts to public services, or more debt.
“Leaders in both parties have worked together to combat inversion for over ten years. Earlier this month, the House passed an amendment with the support of top House tax writer Dave Camp that would ban federal contracts for companies that have reincorporated in Bermuda or the Cayman Islands.
“The companies that have the most to gain from inverting are those that have used accounting tricks to make profits earned here appear on the books of subsidiaries in offshore tax havens. Claiming on paper to be a foreign company comes with a permanent ‘get out of taxes free’ card for profits booked offshore for tax purposes.
“Lawmakers should waste no time in cutting off contracts for these companies and should move quickly to close the ‘inversion’ loophole.”
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