100 organizations urge Congress to oppose 'incredibly bad idea' in GOP tax plan

100 organizations urge Congress to oppose 'incredibly bad idea' in GOP tax plan
© Greg Nash

One hundred organizations, including a number of progressive groups and labor unions, are urging Congress to reject a major international tax change proposed in Republicans' framework for a tax overhaul.

In a letter dated Monday, the groups speak out against the framework's move toward a "territorial" tax system that would largely exempt American companies' foreign profits from U.S. tax.

"It is an incredibly bad idea," wrote the groups, which include the AFL-CIO, Americans for Tax Fairness and the Financial Accountability and Corporate Transparency Coalition.

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"Ending taxation of offshore profits would give multinational corporations an incentive to send jobs offshore, thereby lowering U.S. wages," they wrote. "It would also be a giant loophole for corporations to use accounting gimmicks to move their profits to tax havens, resulting in the loss of billions of dollars in tax revenue for the United States."

Currently, corporations have to pay the 35 percent corporate tax on both their domestic and foreign earnings, though they can defer taxes on their offshore profits until they repatriate the assets. The tax plan released by the White House and congressional Republicans last week instead allows 100 percent of dividends from U.S. companies' foreign subsidiaries to be exempt and would also put in place rules aimed at preventing American companies from shifting profits to tax havens.

Republicans and many business groups argue that moving to a territorial tax system would cause companies to invest more in the U.S. But the groups that signed the letter argued that a territorial system would advantage multinational corporations over businesses that mainly operate domestically. 

A territorial system would "rig the rules for multinational corporations and against American businesses and working people," the groups wrote.