CBO defends tax report from GOP criticism

The Congressional Budget Office is defending a recent report on how U.S. multinational corporations are taxed, after a top Republican criticized the analysis as biased.

Doug Elmendorf, the CBO chief, told House Ways and Means Chairman Dave Camp (R-Mich.) that the office believed the report “presents the key issues fairly and objectively and that its findings are well grounded in economic theory and are consistent with empirical studies in this area.”

“Nevertheless,” Elmendorf added, “because of the complexity of the subject and the diverse views of experts in the field, we agree that it would have been desirable to seek comments from more outside reviewers.”

The taxation of multinationals has become one of the more prominent sticking points in the broader debate over tax reform.

Camp and other Republicans prefer a so-called territorial system, which would essentially shield most or all of a corporation’s offshore profits from U.S. taxation.

But President Obama, in his recent State of the Union address, called for instituting a minimum tax on offshore income.

Camp had criticized the January CBO report for taking sides in what he said was a controversial discussion.

“This report purports to provide an even-handed review of different policy issues related to the taxation of foreign source income,” Camp wrote to Elmendorf last month.

“However, a closer analysis of the report reveals that it is heavily slanted and biased in favor of one specific approach to the taxation of foreign source income – and relies heavily on sources that tend to support that conclusion while ignoring sources that support a different conclusion,” he added.

The back-and-forth between the Ways and Means chairman and CBO comes after Senate Republicans and the Congressional Research Service engaged in a similar spat last year.

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