The final details of the tax plan that will emerge from this Republican Congress are still a ways off. Last week was only the first salvo. In the months to come there will be skirmishes and battles aplenty. Lobbyists are counting on it, so are politicians eager to fill their campaign coffers.
Some opine, perhaps a tad optimistically, that perhaps nothing comprehensive will pass. Since tax cuts for the wealthy have long motivated the GOP’s donors and anti-government ideologues, the odds are good something, even if not a sweeping rewrite of the code, will become law. Whatever does will have real-world consequences for the nation’s ability to invest in infrastructure, education, health care, environmental protection, public safety and the list goes on.
Tax policy will have an enormous role in determining whether income inequality in the United States continues to grow dramatically. At a basic level, everybody understands the issue. Polls consistently show a majority of Americans believe the wealthy and corporations already pay too little. The mere fact the president and Republican leaders are lying about who will benefit from their initial proposals is strong evidence they fear the sentiment.
Still, it’s easy to lose one’s way among the twisting turns of a tax policy debate – or fall asleep on the journey from sheer boredom. The more policymakers and tax campaigners bring the debate back to underlying principals the better off we will all be.
One key value to keep in sight is transparency.
For those involved in the Secrecy World – the offshore system into which trillions of dollars has disappeared – the most important principal is privacy. But a functioning and fair tax system demands its opposite.
Fortune 500 companies hold an estimated $2.6 trillion dollars offshore. By doing so, they avoid up to $767 billion in U.S. federal income taxes. This is a guestimate. Many multinational companies do not publicly report where they book profits or pay taxes. Their tax avoidance schemes are often disguised or highly opaque as ICIJ.org’s Lux Leaks investigation showed. While information may be relayed to individual governments, it’s often not accessible to the public. The lack of detail stymies debate.
The FACT Coalition, an advocacy group promoting financial accountability and corporate transparency, has a good factsheet on the issue as well as ideas for how to reform the system.
Their conclusion is hard to impeach:
“Disclosing more information on where companies book profits, record revenues, and pay taxes would protect taxpayers by discouraging abusive tax avoidance schemes; protect shareholders by providing them with information about the risks associated with their investments; and inform policymakers as Congress considers overhauling the U.S. tax code.”