In 2016, the Joint Committee on Taxation estimated that there was $2.6 trillion in “earnings of foreign subsidiaries of U.S. corporations held offshore” – up from $2.3 trillion in 2012. This was before the Trump tax plan cut the then-35% corporate tax rate. Repatriating this money would go a long way to funding upgrades to our local infrastructure like passenger rail service between Pittsfield and Boston, repairing our crumbling bridges, and deployment of high-speed rural broadband.
For the last 15 years, Rep. Richard Neal has spent a great deal of time and energy promoting legislation to address corporate tax avoidance. Between 2002-2016, Rep. Neal sponsored nine different bills on this issue (see graphic below). In 2002, 2003, and 2005, he introduced the Corporate Patriot Enforcement Act to deal with the problem of corporate inversions where American companies reincorporate in a foreign country to avoid paying U.S. income taxes. In 2007, he introduced a bill to amend the Internal Revenue Code of 1986 to provide that management and administrative activities will not be taken into account in determining if an entity has sufficient business activities in a foreign country to avoid treatment as an expatriated entity. In 2008 and 2009, he sponsored legislation to end the advantage of offshore reinsurance entities over American companies by closing the offshore reinsurance tax loophole. And in 2011, 2013, and 2016, he filed a bill that would stop foreign insurance companies from shifting U.S. income overseas in order to avoid U.S. taxes.
During his 2012 re-election campaign, Rep. Neal ran a TV ad promoting his bill on the offshore reinsurance loophole where he says, “I filed legislation to address that issue and we won.” But not only have none of these bills become law, they have never advanced out of the Committee on Ways & Means to which they were all referred. For someone who goes around touting his seniority and clout as ranking member, to not be able to move any of these bills to the full House for an up-or-down floor vote is galling and embarrassing, especially considering that Democrats controlled the House between 2007 and 2010.
In 2000, Rep. Neal was the only member of the Massachusetts House delegation to vote for a bill
the Foreign Sales Corporation (FCS) Repeal and Extraterritorial Income Exclusion Act which exempted income earned abroad from U.S. taxes from companies that set up offshore offices, known as foreign sales corporations, usually in tax havens such as Bermuda or the British Virgin Islands, to manage their export business.
Over the years, Rep. Neal has taken to the House floor to chastise companies that are known for their corporate tax dodging. In a speech from March 5, 2003, Rep. Neal castigated Tyco International for leaving New Hampshire for Bermuda where they would avoid paying $400 million in U.S. taxes. But Rep. Neal’s outrage and wringing of hands soon turns to outstretched hands as he pockets campaign contributions from the same corporate expatriates he condemns. In the case of Tyco, Rep. Neal took $11,500 in donations from the firm between 2010-2018.
Caterpillar Inc. avoided paying $2.4 billion in U.S. taxes by shifting billions in profits to a wholly owned Swiss affiliate according to a U.S. Senate investigation from 2014. But in the decade between 2008-2018, the construction equipment maker showered Rep. Neal with $17,500 in campaign cash.
Rep. Neal has called companies that go overseas to avoid paying U..S. but are still able to win lucrative government contracts from agencies such as the Department of Homeland Security, “financial traitors.” One of the first big DHS contracts in 2004 went to Accenture Ltd. for $10 billion. The firm which once called Chicago home, inverted in Bermuda in 2001. But Rep. Neal has had no problem accepting $8,000 in campaign contributions from Accenture between 2000-2016.
How about America’s largest corporation, General Electric? In 2010, GE reported profits of $14.2 billion but said only $5.1 billion of that was from its U.S. operations. So thanks to their accounting strategy that allows for concentrating their profits overseas, GE not only paid zero in taxes that year, but got a tax refund of $3.2 billion. Since Rep. Neal arrived in the House in 1989, GE has forked over $103,500 in campaign donations to the gentleman from Springfield.
The stench from Rep. Neal’s hypocrisy on this issue is nauseating.