Trump and Congress gave huge wins to corporate tax dodgers

The Hill

4 days ago

The future is bright for corporate tax dodgers.
While the rest of the world is working together on a plan to crackdown on big companies' use of offshore tax havens, both Congress and the White House are doing everything they can to sabotage these plans for tax fairness.
It's no secret that many major American companies pay lower effective tax rates than their workers. In 2023, almost 10 percent of the nation's largest corporations paid nothing at all in corporate taxes, including profitable giants like Pfizer. Some companies, such as FedEx and T-Mobile, have even found ways to pay negative tax rates, meaning they received tax refunds from the government.
One of the main tricks that corporations use to dodge their taxes is to shift their earnings abroad to offshore tax havens. These tax havens drain nearly a half-trillion dollars from the world's economies each year, including billions of dollars from the U.S. While corporate executives and tiny states like the Cayman Islands benefit from this arrangement, the rest of the world loses out on revenues that could be used for priorities such as healthcare, education and support for workers.
In response, the majority of the world's nations came together in recent years to create a set of rules to fight back against corporate tax evasion. The global minimum tax is a plan to set a minimum corporate tax rate of 15 percent worldwide, preventing a few small nations from setting ultra-low rates to attract corporate tax dodgers. More than 50 countries and territories have already passed laws that would bring this deal into effect, including seven of the world's 10 largest economies.
The Biden administration worked together with the rest of the world on these efforts to fight offshore tax evasion. The U.S. implemented its own version of a minimum tax that was projected to raise $25 billion a year from corporate tax dodgers. Although it fell short of being fully compliant with the deal's standards, it was still a huge step forward for global economic justice.
But this progress started to fall apart on day one of the second Trump administration, when the White House withdrew the U.S. from the global minimum tax deal on the grounds that 'American companies may face retaliatory international tax regimes' if they continue their offshore tax evasion.
The Trump administration also tried to sabotage U.N. negotiations on an international tax framework, saying that they 'reject the very nature of these discussions.' U.S. diplomats even walked out of the meeting and encouraged others to follow them. Embarrassingly, not a single diplomat from any other nation joined them in this stunt.
This rejection of global progress against corporate tax evasion then moved into the halls of Congress. The 'big, beautiful' bill originally contained a policy penalizing countries for passing laws that comply with the global minimum tax, actively punishing those who are fighting back against offshore tax havens. This provision was only removed from the bill after the Treasury Department pressured other major countries into excluding the U.S. from the minimum corporate tax rate — a major blow to the fight against corporate tax dodgers.
Taking an even closer look at the reconciliation bill reveals how corporate interests are pushing this agenda. The bill originally contained a provision partially exempting the U.S. Virgin Islands from our own corporate minimum tax at the cost of $33 million in annual tax revenue. The Washington Post reported that the inclusion of this obscure policy in the Republicans' bill was likely encouraged by Lawrence and David Golub, two billionaire brothers who have spent millions on lobbying and campaign contributions to secure loopholes for their Virgin Islands-based asset management company. This provision was thankfully removed from the final version of the bill.
Republican politicians are not defending offshore tax havens because Republican voters are demanding it. These efforts to sabotage global efforts against corporate tax evasion are being pushed on the American people by a small handful of wealthy donors who have the most to gain from an unfair tax system.
Voters in both parties are tired of politicians making policy to benefit the wealthy few at the expense of the many. A bill containing historically large healthcare cuts while bending over backwards for big corporate tax dodgers is only just the latest example. So long as Congress works on behalf of big corporations who hide their money overseas, their efforts will pose a threat to workers everywhere.