If you had any doubt about just how stark the differences are between the Republican and Democratic approach to fixing our economy, these dueling letters between Treasury Secretary Jack Lew and GOP Senator Orrin Hatch should clear that up for you quickly. At issue is the idea of “economic patriotism.”
First, some background…
There’s currently a loophole in our tax code that allows American companies to dodge paying taxes by renouncing their corporate citizenship, leaving operations here but claiming an overseas address. This legal tax dodge costs our nation billions of dollars each year.
“The practice has become known as “inversion.” But what it really amounts to is desertion. And it could cost Americans tens of billions of dollars. There are 47 firms in the last decade that have exploited this loophole, according to new data compiled by the nonpartisan Congressional Research Service. But it’s a hot topic again because at least a dozen U.S. firms are currently considering taking advantage of it.”…Center for American Progress
The President’s 2015 budget would make it harder for firms to reap the benefits of being an American company while simultaneously dodging their tax obligations by requiring a minimum 50% foreign ownership to avoid U.S. taxes (it’s currently only 20%). This week, Lew sent a letter to Congress urging quick action (okay, try not to laugh…) to pass inversion legislation.
“Congress should enact legislation immediately…to shut down this abuse of our tax system. What we need as a nation is a new sense of economic patriotism, where we all rise and fall together. We know that the American economy grows best when the middle class participates fully and when the economy grows from the middle out. We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes.”
Sounds reasonable, right? Not according to the ranking GOP member of the Senate Finance Committee who penned a testy letter in reply. Not only does Senator Hatch reject the legislative fix offered by Senate Democrats to recoup the billions lost to corporate scofflaws he also redefines the idea of “economic patriotism” by shifting the target from known corporate tax dodgers to American families who depend on Social Security, Medicare, Medicaid and the Children’s Health Insurance Program:
“I must disagree with the administration’s position that we should, in the short term, enact punitive, retroactive policies designed to force companies to remain domiciled in the United States.”
“My hope is that your definition of “economic patriotism” is not so narrow as to only include a particular business practice … I hope that you share my view that “economic patriotism” includes a desire to fix the problems that are truly ailing our country and threatening the livelihoods of future generations. Non-partisan watchdogs and rating agencies have been issuing warnings about our ballooning national debt and runaway entitlements for years now. These issues represent the greatest threat to our fiscal and economic security…”
Welcome to Washington, where you’re an “economic patriot” if you turn a blind eye to corporate tax dodgers who owe this nation billions of dollars and instead take it from middle-class benefits paid for by average Americans , the truest patriots of all, who worked a lifetime building the economy that fuels those corporate profits to begin with.