House requires country-by-country reporting to cut down on multinational corporate tax evasion that endangers investors and consumers
CONTACT: U.S. Public Interest Research Group
WASHINGTON – Today, Representative Mark Pocan (D-WI) introduced H.R. 6126, the Corporate Transparency and Accountability (CTA) Act which addresses rampant corporate tax evasion. The bill will require multinational corporations to provide the Securities and Exchange Commission with income and tax information on a country-by-country basis, and will make that offshore financial information available to the public.
“We are grateful to Congressman Pocan for his effort to uncover tax dodgers,” said Alexandria Robins, tax and budget associate with U.S. PIRG. “With more and more headlines highlighting global efforts to put an end to shady tax schemes, it’s clear that it’s time for the U.S. to catch up.”
The bill requires publicly traded multinational companies to report information about revenues, profits, taxes, and certain operations on a country-by-country basis to their investors. If passed, investors will better be able to analyze the risk inherent in a company’s tax strategy, leading to a better allocation of capital and more stable financial markets. More broadly, this bill is a step toward discouraging corporations from attributing profits to offshore tax havens where they conduct little to no real business, solely for the purpose of cutting down their U.S. tax bill.
The role played by international tax strategies and rates on the operations and earnings of many public U.S. corporations is enormous and growing. In large part, this trend is due to many U.S. issuers’ increasing reliance on moving earnings offshore. U.S. PIRG found that the U.S. loses approximately $147 billion in federal and state revenue each year due to corporations using tax havens to dodge their taxes. These schemes are a major risk to uninformed investors. Shareholders have little information on a company’s tax strategy—leaving their investors subject to enforcement actions and policy changes at home and abroad.
Robins added, “Unfortunately the SEC’s disclosure framework has not kept up with the increasingly complex international tax strategies that improve [corporation’s] bottom lines. Mr. Pocan’s bill is a common sense solution that levels the playing field and U.S. PIRG is proud to support this legislation. ”
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