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McCaskill and Blunt-Supported Plan to Fund Road and Bridge Repairs Would Create Massive Corporate Tax Break
ST. LOUIS – Sens. Claire McCaskill (D-MO) and Roy Blunt (R-MO) recently backed a bill to address funding shortfalls for road and bridge repairs in Missouri. According to a new analysis, the bill contains massive corporate tax breaks that could cost taxpayers an estimated $105 billion.
Many of the nation’s most profitable corporations stash profits made in the United States in overseas tax havens to avoid paying taxes. The McCaskill and Blunt-backed “Partnership to Build America Act” (S. 1957) would allow corporations to bring up to six dollars of the profits they have stashed offshore back to the United States tax-free for every dollar spent purchasing bonds to fund infrastructure projects. To reach the bill’s goal of raising $50 billion for the infrastructure bank, taxpayers would lose up to $105 billion in tax revenue, according to a new analysis by the Economic Policy Institute.
“The plan that Senators Claire McCaskill and Roy Blunt support to fund road and bridge repairs is a great deal for corporations taking advantage of tax loopholes, but not for Missouri taxpayers,” said Alec Sprague, Midwest federal advocate for MoPIRG. “It would be much cheaper and fairer to taxpayers if Congress directly funded road and bridge repairs by closing offshore tax loopholes. Instead, they’re trying to use a gimmick that will increase revenue lost through those loopholes at the taxpayers’ expense.”
This is not the first proposal to allow corporations to return their profits to the U.S. tax-free. Congress passed a similar bill in 2004 that benefited some of the worst corporate tax dodgers. In 2011, the Senate Permanent Subcommittee on Investigations found that just 0.015% of all U.S. companies used that “tax holiday”, and only 15 large corporations accounted for nearly half of the cash that was repatriated.
“Companies are parking more and more money offshore because every decade or so, Congress lets them bring that money back tax-free,” said Sprague. “Missouri’s taxpayers and small businesses have to make up the difference through higher taxes, lower funding for services like repairing roads or bridges, or a larger deficit.”
The Senate Permanent Subcommittee on Investigations also found that the 20 companies that repatriated the most earnings under the 2004 holiday already have three times as much money parked offshore as they did at the end of 2005. Because of this, the Joint Committee on Taxation concluded that a repeat of that measure would add up to $79 billion to the deficit over ten years.
“We need to fund repairs for crumbling bridges and roads in Missouri, there’s no question about that,” Sprague added. “But this is not the way to do it.”
MoPIRG Foundation published a report last year that found that offshore tax dodging costs the State of Missouri $843 million annually, which would be more than enough to finance the Missouri House plans last session for highway and infrastructure repair without raising any taxes.
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