By Erik Wasson - 02/07/13 05:00 PM EST
Their bill would stop companies from deferring tax payments on profits earned abroad. Currently taxes only need to be paid when the profits are repatriated and many companies have kept capital overseas for years to avoid tax penalties. This had led to some calls for a tax holiday to encourage companies to bring capital back to the U.S.
Sanders and Schakowsky said their bill would raise $590 billion over ten year according to a Joint Committee on Taxation analysis.
“It is past time for corporate America to contribute significantly to deficit reduction,” said Sanders in a statement.
Under the bill, companies would pay U.S. taxes as profits are earned and they would still be able to deduct the value of taxes paid to foreign governments.
The bill would also restrict the ability of companies to claim the deduction by apply deductions only to profits earned in the same country where tax was paid and by tightening rules on how royalties such as on oil and gas extraction are treated.
The bill also aims to stop companies from using post-office drop boxes to claim exemption from U.S. tax.
According to a summary, “a corporation could not claim to be from another country if their management and control operations are primarily located in the U.S.”
The bill has strong backing of the AFL-CIO and unions not affiliated with it.
"Too many corporations are taking advantage of tax loopholes that allow them to keep trillions of dollars overseas without paying taxes they owe. These loopholes have cost millions of jobs and enabled corporations to avoid paying their fair share. It’s about time they are closed," Service Employees International Union president Mary Kay Henry said in a statement.