Photo Courtesy U.S. Congress
Sen. Kirsten Gillibrand
By Forum Staff
U.S. Sen. Kirsten Gillibrand (D-N.Y.) on Thursday called for “bold actions” to invest in American companies, protect jobs, and ensure coronavirus relief funds are reinvested in the United States economy. Gillibrand recently cosponsored the bicameral No Tax Breaks for Outsourcing Act, legislation that would protect U.S. jobs by ending tax incentives created by the 2017 Trump tax giveaway bill, which send jobs and profits overseas, according to the senator.
Additionally, Gillibrand joined Senate Democrats in urging President Joe Biden to temporarily suspend trade waivers that could allow foreign companies to bid on projects funded by the American Rescue Plan. In an effort to give U.S. companies and their workers a fair shot at these government contracts and ensure COVID-19 relief and recovery funds are reinvested in the U.S., Gillibrand and her colleagues are pushing to close loopholes that allow foreign firms — which do not have American workers or pay American taxes — to bid as American companies. By suspending these waivers while trade-pact terms are renegotiated with our trade partners, the United States would put Americans back to work, reduce shortages for crucial items like Personal Protective Equipment, ventilators, and chemical inputs for pharmaceuticals, and boost domestic industries responsible for those products.
Specifically, the No Tax Breaks for Outsourcing Act would repeal offshoring incentives by:
Equalizing the tax rate on profits earned abroad to the tax rate on profits earned in the U.S. It would end the preferential tax rate for offshore profits by eliminating the deductions for “global intangible low-tax income” and “foreign-derived intangible income” and applying GILTI on a per-country basis.
Repealing the 10 percent tax exemption on profits earned from certain investments made overseas. In addition to the half-off tax rate on profits earned abroad, the Trump tax exempts from taxation entirely a 10 percent return on tangible investments, such as plants and equipment, made overseas. The new bill would eliminate this offshoring incentive.
Treating “foreign” corporations that are managed and controlled in the U.S. as domestic corporations. Ugland House in the Cayman Islands is the five-story legal home of over 18,000 companies, many of them really American companies in disguise. This section would treat corporations worth $50 million or more and managed and controlled within the U.S. as the U.S. entities they in fact are, and subject them to the same tax as other U.S. taxpayers.
Cracking down on inversions by tightening the definition of expatriated entity. This provision would discourage corporations from renouncing their U.S. citizenship. It would deem certain mergers between U.S. companies and smaller foreign firms to be U.S. taxpayers, no matter where in the world the new companies claim to be headquartered. Specifically, the combined company would continue to be treated as a domestic corporation if the historic shareholders of the U.S. company own more than 50 percent of the new entity. If the new entity is managed and controlled in the U.S. and continues to conduct significant business here, it would continue to be treated as a domestic company regardless of the percentage ownership.
Eliminating tax break for foreign oil and gas extraction income. Oil and gas extraction income earned abroad gets a further break on the already half-off rate other industries pay on their offshore profits. This provision would eliminate this special tax break for big oil and gas companies.