The Stop Corporate Inversions Act of 2014 has been created to prevent the loss of billions of dollars in revenue through a flood of inversions, a loss that would add to the tax burden of American taxpayers. This new bill would impose a two-year moratorium on inversions, the practice of shifting a corporation’s tax residence overseas through acquisition of an offshore company to avoid paying U.S. income taxes.
The average family in the U.S. pays over 18 percent in federal taxes, but by using loopholes like inversions, major corporations pay an average of 13 percent. The Stop Corporate Inversions Act of 2014 will save billions of dollars that can in turn be used for investments in education, infrastructure, and research and development.
According to Cohen, inversions are not the only reason the effective corporate tax rate is much smaller for many companies than the statutory corporate tax rate. There are other corporate loopholes that should be closed in conjunction with lowering the statutory corporate tax rate.
“This is about leveling the playing field and rooting out flagrant tax abuse in our system that could lead to billions of dollars of lost revenue," said Sen. Tim Kaine, D-Va. “In order to fully restore budget certainty, we need to look at abuses in the tax code as much as spending. The fact that companies can change their tax liability to low-tax jurisdictions on paper while maintaining operations and ownership in the U.S. is unacceptable and I'm pleased to join my colleagues to introduce this important fix.”