Washington, D.C. – Frank Clemente, executive director of Americans for Tax Fairness Action Fund, released the following statement in support of Hillary Clinton’s plan to end corporate inversions:
“We support Secretary Clinton’s bold proposal to close the corporate inversion tax loophole, which lets U.S. multinationals desert America to dodge taxes by changing their legal address to an offshore location, typically a tax haven.
“If this proposal were to become law, the tax benefits of the planned Pfizer-Allergan merger would evaporate.
“Clinton’s plan would block the significant tax benefits enjoyed by an inverted company unless at least a majority of the inverted company is owned by foreign shareholders. The new Pfizer would not meet that test as 56% of the shareholders in the new company are original Pfizer shareholders.
“Clinton also would impose an exit tax that would be applied to the profits inverting companies have stashed offshore that have not yet been taxed in the United States because of the deferral tax loophole. Americans for Tax Fairness has estimated, and The New York Times got Pfizer to confirm, that the company has about $140 billion in offshore profits that have not yet been taxed here at home. Most of this money is likely in Pfizer’s 151 subsidiaries in a total of 10 tax havens, where it has paid little if any tax. Under Clinton’s plan Pfizer would owe a 35% corporate tax rate on that money, less any foreign taxes paid.
“We commend Secretary Clinton for proposing the exit tax on all corporations that merge with foreign firms, not just those that are inverting. The United States applies an exit tax when individuals renounce their citizenship and owe taxes on their offshore holdings. The same standard should apply to Benedict-Arnold corporations that desert America to dodge paying their fair share of taxes.”
Clemente wrote about the need for an exit tax in a column in The Hill last year.
Americans for Tax Fairness Action Fund is a project of the Sixteen Thirty Fund, which is organized under 501(c)(4) of the Internal Revenue Code. It should not be confused with Americans for Tax Fairness, a project of the New Venture Fund, organized under 501(c)(3) of the IRC. The 425 endorsing organizations that comprise Americans for Tax Fairness operate separately from the activities of Americans for Tax Fairness Action Fund.