Washington, D.C. – Americans for Tax Fairness Action Fund applauds Hillary Clinton’s new campaign ad denouncing Johnson Controls for “gaming the system and moving profits to Ireland so they can avoid paying taxes here at home.”
“With this ad, Hillary Clinton makes a clear case for why the Obama Administration should close the loophole that will allow Johnson Controls to walk away from the taxes it owes on $8.1 billion of untaxed offshore profits,” said Frank Clemente, executive director of Americans for Tax Fairness Action Fund. “The Administration can, and should, act quickly. Pfizer, the giant pharmaceutical company, is trying to take advantage of the same loophole, which could allow it to dodge tens of billions in taxes when it too merges with an Irish company.”
In January, Americans for Tax Fairness called for the U.S. Treasury Department to use its authority to deny the tax benefits of two proposed mergers between American corporations and foreign corporations based in Ireland, a tax haven: Johnson Controls/Tyco International and Pfizer/Allergan.
The tax benefits of these corporate inversions would be denied if Treasury revises a Notice it issued in 2014 intended to remove critical tax breaks U.S. companies receive when they invert with a foreign company based in a tax haven.
An analysis in the week’s Tax Notes (Feb. 22, 2016, subscription required) prepared by Stephen Shay, former Deputy Assistant Secretary for International Tax Affairs, and others, explains how these companies can use inversions and mergers to get around current Treasury Department rules to dodge taxes on their offshore profits and how Treasury could modify its 2014 rule to block Pfizer and Johnson Controls from taking advantage of this tax loophole.
“Secretary Clinton is absolutely correct that it is an ‘outrage’ for Johnson Controls to game the system to avoid its U.S. taxes after American taxpayers bailed them out in their time of need. The Obama Administration and Congress should do everything they can to stop Johnson Controls and Pfizer from walking out the door without paying the taxes the already owe,” Clemente said.
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.