Time to Stop Tax Breaks for Outsourcing

It makes little sense for the U.S. government to provide tax breaks to companies that outsource America's jobs, and yet the recently passed Republican tax law makes the problem worse, it doesn't solve it. That's why Rep. Lloyd Doggett (D-Texas) and Sen. Sheldon Whitehouse (D-R.I.) are introducing the "No Tax Breaks for Outsourcing Act."

About the legislation, Doggett said:

Let’s level the playing field for domestic companies by ensuring that multinationals pay the same tax rate on profits earned abroad as they do here at home. This legislation would set the minimum tax on the foreign profits of multinationals equal to the statutory corporate tax rate on domestic profits and apply that rate to a similar base. It would end discrimination against companies with mostly domestic sales by not advantaging multinationals with such a huge tax break on profits earned abroad.

More specifically, the bill would:

  • Equalize the tax rate on profits earned abroad to the tax rate on profits earned here at home. The new tax law allows companies to pay half of the statutory corporate tax rate on profits earned abroad, and for many it may be nothing or next to nothing. This legislation would end the preferential tax rate for offshore profits and ensure companies pay the same rate abroad as they do in the United States. This leveling of the playing field is achieved by eliminating the deductions for "global intangible low-tax income" and "foreign-derived intangible income."
  • Repeal the 10% tax exemption on profits earned from certain investments made overseas. In addition to the half-off tax rate on profits earned abroad, the new law exempts from tax entirely a 10% return on tangible investments made overseas, such as plants and equipment. This legislation would eliminate the zero-tax rate on certain investments made overseas.
  • Treat "foreign" corporations that are managed and controlled in the U.S. as domestic corporations. This provision would address the "Ugland House problem" of U.S. corporations nominally organizing in tax havens. Ugland House in the Cayman Islands is the five-story legal home of more than 18,000 companies, many of them really American companies in disguise. This section would treat corporations worth $50 million or more and managed and controlled within the United States as the U.S. entities they in fact are and subject them to the same tax as other U.S. taxpayers.
  • Crack down on inversions by tightening the definition of expatriated entity. This provision would discourage corporations from renouncing their U.S. citizenship. It would deem any merger between a U.S. company and a smaller foreign firm to be a U.S. taxpayer, no matter where in the world the new company claims to be headquartered. Specifically, the combined company would continue to be treated as a domestic corporation if the historic shareholders of the U.S. company own more than 50% of the new entity. If the new entity is managed and controlled in the United States and continues to conduct significant business here, it would continue to be treated as a domestic company regardless of the percentage ownership.
  • Combat earnings stripping by restricting the deduction for interest expense for multinational enterprises with excess domestic indebtedness. Multinationals often shrink their U.S. tax bills by paying interest to their foreign-based subsidiaries. Recognizing this injustice, the House Republican tax bill originally prohibited it, as then-President Barack Obama had recommended in his proposed budget. Deductible interest should be limited based on the U.S. subsidiary’s proportionate share of the multinational’s net interest expense, reflecting the underlying business reality. Unable to withstand lobbying pressure, Republicans abandoned this correction. This bill would restore it.

The legislation already has been endorsed by the AFL-CIO, AFGE, AFSCME, the Alliance for Retired Americans, Communications Workers of America (CWA), International Federation of Professional and Technical Engineers (IFPTE), UAW, Working America, American Family Voices, Americans for Democratic Action, Americans for Tax Fairness, Campaign for America’s Future, Coalition on Human Needs, Credo, Economic Policy Institute Policy Center, the Financial Accountability and Corporate Transparency (FACT) Coalition, the Institute on Taxation and Economic Policy, Main Street Alliance, MomsRising, Network Lobby for Catholic Social Justice, Other98, Oxfam America, Patriotic Millionaires, People Demanding Action, Progressive Congress Action Fund, Public Citizen and Small Business Majority.

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Reposted from the AFL-CIO

Posted In: Allied Approaches, From AFL-CIO

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work

There is Dignity in All Work