Critics of the GOP tax overhaul say it rewards U.S. companies for moving jobs and profits offshore and may actually encourage outsourcing compared to the old rules. The liberal Institute on Taxation and Economic Policy estimates that the new international provisions will cost the Treasury an additional $14 billion in lost revenue over the next decade.
On Tuesday, Rep. Lloyd Doggett (D-TX) and Sen. Sheldon Whitehouse (D-RI) introduced the No Tax Breaks for Outsourcing Act, which is designed to address the issue. According to Doggett, the bill would:
- Equalize the tax rate on profits earned abroad to the tax rate on profits earned in the U.S.
- Repeal the 10 percent tax exemption on profits earned from certain investments made overseas
- Treat “foreign” corporations that are managed and controlled in the U.S. as domestic corporations
- Crack down on inversions by tightening the definition of expatriated entity
- Combat “earnings stripping,” in which corporations reduce their taxable U.S. income by making interest payments to foreign affiliates.
The Democratic bill has little to no chance of advancing in the GOP Congress.