113 HR 3666 IH: Sequester Delay and Stop Tax Haven Abuse Act U.S. House of Representatives 2013-12-05 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I113th CONGRESS1st SessionH. R. 3666IN THE HOUSE OF REPRESENTATIVESDecember 5, 2013Ms. DeLauro (for herself and Mr. Doggett) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Financial Services and the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concernedA BILLTo alleviate the sequestration and to end offshore tax abuses, to preserve our national defense and protect American families and businesses from devastating cuts, and for other purposes.

1.

Short title, etc

(a)

Short title

This Act may be cited as the Sequester Delay and Stop Tax Haven Abuse Act.(b)

Amendment of 1986 code

Except as otherwise expressly provided, whenever in titles II through IV of this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.(c)

Table of contents

The table of contents of this Act is as follows:Sec. 1. Short title, etc.Sec. 2. Findings.Title I—Extension of SequestrationSec. 101. Repeal the 2014 and 2015 sequesters.Sec. 102. Modification of discretionary spending caps for fiscal year 2016.Title II—Deterring the use of tax havens for tax evasionSec. 201. Authorizing special measures against foreign jurisdictions, financial institutions, and others that significantly impede United States tax enforcement.Sec. 202. Strengthening the Foreign Account Tax Compliance Act (FATCA).Sec. 203. Treatment of foreign corporations managed and controlled in the United States as domestic corporations.Sec. 204. Reporting United States beneficial owners of foreign owned financial accounts.Sec. 205. Swap payments made from the United States to persons offshore.Title III—Other measures To combat tax haven abusesSec. 301. Country-by-country reporting.Sec. 302. Penalty for failing to disclose offshore holdings.Sec. 303. Deadline for anti-money laundering rule for investment advisers.Sec. 304. Anti-money laundering requirements for formation agents.Sec. 305. Strengthening John Doe summons proceedings.Sec. 306. Improving enforcement of foreign financial account reporting.Title IV—Ending corporate offshore tax avoidanceSec. 401. Allocation of expenses and taxes on basis of repatriation of foreign income.Sec. 402. Current taxation of royalties and other income from intangibles received from a controlled foreign corporation.Sec. 403. Limitations on income shifting through intangible property transfers.Sec. 404. Repeal of check-the-box rules for certain foreign entities and CFC look-thru rules.Sec. 405. Prohibition on offshore loan abuse.

2.

Findings

The Congress finds the following:(1)Over the last three years, Congress has enacted several rounds of spending cuts that are negatively impacting core government programs and services including medical research, education, public safety, and so much more. These cuts were made worse by sequestration, and the impact of sequestration in 2014 will be worse for the economy, as spending cuts will be larger, begin immediately, and build on the previous rounds of cuts.(2)If sequestration continues into 2014, discretionary spending subject to the Budget Control Act caps will be $123 billion or 11 percent lower than it was in 2010.(3)In October 2013, the International Monetary Fund downwardly revised the GDP growth forecast for the United States by 0.2 percent due to the expectation that sequestration would remain in place through 2014.(4)According to the Congressional Budget Office, repealing the 2014 sequestration cuts would increase real GDP by 0.6 percent and increase employment by 800,000 jobs.(5)The Sequester Delay and Stop Tax Haven Abuse Act will repeal sequestration for 2014 and 2015 and partially reduce sequestration in 2016 without increasing the deficit.(6)United States corporations are paying historically low Federal taxes while reaping all-time high profits. Corporate taxes in 2012 accounted for just 9.9 percent of total revenue, compared with 32.1 percent 60 years earlier, according to the Office of Budget and Management. In 2012, United States corporations kept an estimated $1.9 trillion in undistributed foreign earnings offshore.(7)Corporations avoid Federal taxation in part by using tax loopholes to shift their profits offshore through an increasing number of foreign subsidiaries. In 2008, the Government Accountability Office reported that 83 of the top 100 publicly traded companies had subsidiaries in offshore tax havens. More than two dozen large, profitable United States corporations paid no Federal taxes at all in 2011.(8)The United States is losing an estimated $150 billion a year in revenue to offshore tax-avoidance schemes. In 2008, the Government Accountability Office released information showing 18,857 corporations listed their address of incorporation as the Ugland House in the Cayman Islands, nearly 9,000 of which had a United States billing address. According to Audit Analytics, a private research firm, the estimated $1.9 trillion in United States profits being kept abroad untaxed represents a 70 percent increase over the last 5 years.(9)In 2008, according to an analysis by the Congressional Research Service, American multinational companies collectively reported 43 percent of their foreign earnings in five tax haven countries: Bermuda, Ireland, Luxembourg, the Netherlands, and Switzerland. Yet these countries accounted for only 4 percent of the companies’ foreign workforce and just 7 percent of their foreign investment.(10)According to the Congressional Budget Office, though the statutory corporate tax rate is 35 percent, corporations were actually taxed at an effective rate of 12.1 percent in 2011.(11)The corporate tax share of the American economy is less than the corporate tax share of the economies of our foreign competitors. At 2.7 percent, the United States ranked 17 out of 32 Organisation for Economic Co-operation and Development (OECD) countries, behind Great Britain, Canada, and Japan.(12)Corporate tax loopholes that allow United States corporations to use shell companies and accounting gimmicks to move profits offshore, encourage United States corporations to move jobs and operations overseas, and put domestic firms that pay taxes at a competitive disadvantage should be closed.