Clinton Floats Executive Action Crackdown on Corporations
Democratic presidential candidate Hillary Clinton is fixating her crosshairs on large corporations, and if elected, she suggested she would seek executive action against them.
“Here’s the bottom line: corporations don’t need a tax break — you do,” Clinton told a crowd in Waterloo.
The statement came weeks after news broke that pharmaceutical giant Pfizer would be merging with Ireland-based Allergan, a deal that is worth nearly $160 billion.
The Hill reports:
he primary benefit of the merger could be “earnings stripping,” a practice in which corporations shift profits to countries with lower tax rates while maximizing high deductions in the U.S., a campaign aide said.
Clinton for argued for the first time Wednesday that if Congress doesn’t take action to end earnings stripping, the Treasury Department could use its legal authority to crack down on this “loophole.”
The Clinton Camp estimates her proposal would raise about $60 billion over 10 years, which could be used to support manufacturing, research and small business.
The former secretary of State also urged Congress to require the foreign merging partner to control at least a 50-percent stake in the combined company in order for the U.S. company to expatriate, an increase from 20 percent under current law, the aide said. This idea is also included in legislation sponsored by House Ways and Means Committee ranking member Sandy Levin (D-Mich.) and others and a proposal in president Obama’s budget request.
She also discussed her support for an “exit tax” on the untaxed foreign earnings of companies that abandon their U.S. residences.
“The maneuvers powerful corporations are using to game the system and leave everyday taxpayers holding the bag are just offensive,” Clinton said. “All told, inversions by Pfizer and other companies, plus related loopholes, will cost American taxpayers more than $80 billion in revenue over the next 10 years. That’s money we should be investing here at home. This is not only about fairness; this is about patriotism. I want to raise the cost to corporations that try to get out of paying their fair share.”
Clinton’s chief rival for the Democratic nomination, Sen. Bernie Sanders (I-Vt.), recently criticized the Pfizer merger in a commentary piece in the New Hampshire Union Leader.
“This merger would reward Pfizer’s bad behavior by allowing it to inflate its already-enormous profits on the backs of the American people,” he said. “Enough is enough. The Congress and the President must stop Pfizer’s merger, and then act to end this enormous tax loophole once and for all.”
A few days before the merger announcement, the Treasury Department released new guidance aimed at addressing inversions. Treasury also released guidance on the topic in 2014 and is looking into putting out additional guidance, including on earnings stripping. But Treasury Secretary Jack Lew has said that only Congress can actually stop inversions.
Many congressional Republicans think that the only good way to stop inversions is through tax reform. But Treasury and some Democrats think that Congress could take more targeted, immediate action to curb these transactions.
Photo credit: The Guardian.