August 3rd, 2010, Fairfax, VA—New research by Americans for Limited Government (ALG) has uncovered that Senator Carl Levin has teamed up four nonprofit groups that are posing as small business advocates “to deceive the public into believing that small businesses actually support double taxation on profits generated overseas,” said ALG President Bill Wilson.
Tomorrow, the Senate is expected to vote on legislation that would, in addition to spending $26.1 billion to balance state budgets, limit the use of the foreign income tax credit by U.S. companies that operate overseas.
Four groups, Business and Investors Against Tax Haven Abuse, American Sustainable Business Council, Business for Shared Prosperity, and Wealth for the Common Good, all support the legislation. They published in July a 25-page report defending it, “Unfair Advantage: The Business Case Against Overseas Tax Havens”.
“[T]hose voices purporting to represent small business are in fact highly partisan, hyper-ideological partisans with a questionable agenda. The extremist views these individuals have taken have no credible base of support among America’s job-generating small business community,” wrote ALG President Bill Wilson in his letter to the Senate.
According to the ALG report, the four groups are tied to the Institute for Policy Studies (IPS), “a radical left-wing think tank. IPS was founded in the 1960s; and for the past five decades, IPS has reliably churned far-left propaganda”. This includes “broadly supporting most communist regimes and revolutionary groups around the world”; opposing NAFTA and other free trade agreements; and forging ties with the Middle East Research and Information Project, a group that praised the 1973 Munich Olympics terrorist attack against 11 Israeli athletes.
IPS is funded by left-wing activist George Soros.
Wilson in his letter called the four groups’ attempt to appear to represent small business a “class-warfare ploy” that may be “integral to this cynical move [and] may have value in the ivory towers or radical discussion groups. But I assure you the American people, including the millions of unemployed, long ago saw through it and recognize it for what it is; a sad, hypocritical attempt to deceive the public.”
“Senator Levin’s proposal is to raise taxes on U.S. businesses that operate overseas, thus driving jobs and capital into other countries,” Wilson said, adding, “That’s not in the interests of the American people. Senator Levin cannot fool them by putting a phony ‘small business’ label on what is an anti-business measure.”
“In reality, these groups simply want to use the tax code to punish businesses that profit overseas where the corporate income tax rates are less than here,” Wilson said.
The bill will limit the use of the Section 956 foreign income tax credits for profits generated overseas.
According to a U.S. Chamber of Commerce letter to Congress, Section 956 “allows companies to repatriate cash to the United States in a tax efficient manner.” This prevents companies from paying taxes overseas on profits, then repatriating those profits and having them taxed again by the federal government. The Chamber says that the Section has been “particularly beneficial during the recent economic downturn and ensuing credit crunch when it was necessary for American worldwide companies to repatriate significant funds in order to meet the financial needs of their U.S. businesses.”
Wilson continued, “The so-called ‘Unfair Advantage’ proposal proceeds from the presumption that raising taxes on foreign profits will not result in further pushing companies and jobs overseas, when the solution is to slash domestic corporate tax rates to make the U.S. more competitive in the global marketplace.” The U.S. has the second highest corporate tax rate in the world, behind Japan.
“No other country does what is being proposed in the Senate, which effectively extends the U.S. corporate tax rate all over the world — but only applying it to U.S. companies,” Wilson explained, warning that companies would simply not repatriate profits earned overseas, and that some U.S. companies may even simply become foreign companies as a result.
“All to spend $10 billion for state public teachers unions and $16.1 billion for state Medicaid spending in a single year, the Senate is willing to put at risk the 22 million jobs employed by U.S. companies that operate overseas and the capital flows these companies generate by contributing nearly half of U.S. exports,” Wilson concluded.
Attachments:
“Special Research Report from Americans for Limited Government on the Report, ‘Unfair Advantage,'” Americans for Limited Government, August 2010.
“Radical Left-Wing Non-Profits Aligned with Sen. Levin Falsely Posture as Small Business Advocates,” by Kevin Mooney, August 3rd, 2010.
“The Return of the States Bailout,” by ALG President Bill Wilson, August 2nd, 2010.
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