Sherrod is working on a bipartisan plan to fix our broken tax code, make sure corporations and billionaires pay their fair share, and invest in infrastructure projects at the same time.
Read about his plan in the Op-Ed below. And sign the petition urging Congress to act:
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Cleveland.com
Fixing a broken tax code
by Sherrod Brown
As a Cleveland Indians fan, I have grown used to saying “wait until next year.”
But as a legislator, this saying infuriates me – particularly when it comes to our tax system. Our tax code is so broken that it creates incentives for multinational corporations to move jobs and profits overseas – profits they’d like to return to the U.S. and revenue that our Treasury needs.
But as a member of the Senate Finance Committee, I’ve seen targeted Democratic and Republican tax reform efforts stifled due to the hope of comprehensive tax reform in the future, a future that is always way over the horizon.
In baseball, hope can triumph over reason. But as policymakers, we have an obligation to act when opportunity presents itself, rather than wait for next season. And right now there is a political opportunity to solve two of America’s pressing economic problems at the same time.
Over the past several months, I worked with Democrats and Republicans on a special International Tax Reform Working Group to explore challenges facing our international tax system.
In our current system, nobody wins. American corporations can legally shift profits overseas to avoid taxes in the U.S. Not only does this deprive our tax base of needed revenue, but it also prevents these same corporations from accessing profits to invest in the U.S. or return money to shareholders. Meanwhile, foreign companies that are able to access American companies’ overseas cash threaten to take over U.S. corporations.
At the same time, our trust fund for infrastructure projects is nearly empty. Our roads, bridges, rail lines, and ports are in need of critical repairs to ensure that American commuters can efficiently get to work and that American businesses can transport and sell their products. For years now we have needed a long-term highway bill with increased investment, but have been forced to settle for the lowest political denominator of short-term, flat-funded patches.
Later today at the Cleveland City Club, I’ll outline a bipartisan path forward. Earlier this month, our International Tax Working released a bipartisan framework to reform international taxes and generate needed revenue to pay for long-term and robust infrastructure improvements. At the same time, the Chairman of the Ways and Means Committee, Rep. Paul Ryan, began similar discussions with the White House.
Here’s how reform would work: we would create a new, simplified international corporate system that eliminates incentives to offshore profits. First, the new system would allow corporations to pay taxes in the country in which they were earned. Second, we would eliminate tax havens by creating a county-by-county global minimum tax. This means that if a company is manufacturing products in a foreign nation for sale in a foreign country, they would pay nearly all of their tax to that foreign country and then be free to use their profits as they see fit. But if a company is moving profits to a tax haven and generates little economic activity in that nation, than it would owe the U.S. the minimum tax immediately. Third, the new system should include robust incentives to locate R&D jobs and manufacturing in the U.S.
This new system would allow corporations to make investments driven by economics – and not tax arbitrage – while introducing new rules to prevent them from using debt structuring to hide profits generated in the US. Finally, this new system would allow the return of nearly two trillion dollars in profits stranded overseas through a one-time tax. That tax would be used to fund a long-term transportation bill at the increased levels our country needs.
We know that a reasonable tax on locked-out, overseas funds is enough to pay for pressing infrastructure needs across our country. In my home state of Ohio, the Brent Spence Bridge – which connects Ohio and Kentucky and moves goods totaling 4 percent of our GDP each year – has been described as “dangerous” and “obsolete.” There are similar “Brent Spences” around the entire nation that also need repair now.
With a pressing deadline to shore up our infrastructure trust fund, now is the time to act. Reforming our international tax system provides us with an opportunity to increase global competitiveness while investing in infrastructure. We cannot wait until “next season.” After all, as any Indians fan knows, next season has been “just around the corner” for 67 years.
