At a time when major U.S. corporations have a record amount of cash stashed abroad, a group of influential CEOs want to make it even easier for companies to pay less in U.S. taxes on those profits.
The Business Roundtable, a lobbying coalition of business leaders, plans to spend six figures on a campaign aimed at convincing lawmakers to lower the top corporate tax rate to 25 percent from 35 percent and shift to a territorial tax system, according to The Hill. The group argues that the changes would help U.S. companies compete against their foreign counterparts.
“Most current U.S. international rules for taxing foreign-earned income were enacted in the 1960s and reflect the realities of a different era,” the Business Roundtable argues on its website. “It’s time we unlock potential for domestic investment by transitioning from the uncompetitive ‘worldwide system’ to a ‘territorial system’ that will promote growth and jobs in the U.S.”
A territorial tax system allows businesses to put money overseas and only pay taxes to the foreign country where it’s parked. Currently companies pay U.S. taxes on any overseas profits they bring back home.
The push comes as American-based multinational companies are stashing a record $1.9 trillion or more overseas, according to Bloomberg. And businesses are boosting the amount of money they park offshore. Companies including General Electric, Citigroup and Apple shielded more than $229 billion from U.S. taxes in the last year by moving profits made in the U.S. to foreign countries, according to a recent report from Center for Tax Justice. And a September Senate report accused companies like Microsoft and Google of sending money overseas to avoid paying billions in taxes.
That's why it may come as no surprise that the Business Roundtable isn’t the only pro-business group pushing for a territorial tax system. A lobbying coalition called LIFT, which is in the process of launching, is working towards a similar goal, Politico reports. Like other pushes for corporate tax reform, the Business Roundtable claims its plan would be revenue neutral -- in other words, the new corporate tax code would bring in the same amount of money as the current one.
Still, groups like CTJ say a move to a territorial tax system would hurt the U.S. by incentivizing companies to shift profits and jobs overseas and ensuring that companies never pay U.S. taxes on the money they've already stashed offshore.