Tax havens unfair to small businesses

The Washington Post Published: April 22

The latest deficit-reduction plan offered by Erskine Bowles and Alan Simpson supports the interests of big business at the expense of the United States’ small businesses by calling for adoption of a territorial tax system. In two recent polls, small-business owners have soundly rejected making abuse of offshore tax havens by multinational organizations legal and permanent.

A March poll sponsored by the American Sustainable Business Council and Main Street Alliance found that 85 percent of those surveyed, including 67 percent of Republican small-business owners, opposed a territorial tax system that would exempt foreign profits from U.S. taxes. The National Small Business Association reported that only 16 percent of small business owners they polled supported a shift to the territorial tax system.

Elected leaders should not support any proposal for taxing multinational corporations that small business owners view as wrong and unfair.

Frank Knapp Jr., Washington

The writer is vice chairman of the American Sustainable Business Council.

Original Article

Small business opposes multinational corporations' tax avoidance

The Hill's Congress Blog
April 9, 2013

 

By Frank Knapp, Jr., vice chairman, American Sustainable Business Council

In our highly partisan environment there seems to be very few issues that Republicans, Independents and Democrats agree on. This partisanship is easily seen in Congress but is also alive with voters across the country. Small business owners are often no different than their customers in demonstrating divergent opinions on issues depending on their political preferences.

So when we find an issue on which small business owners agree, regardless of partisan leanings, we should take notice. And when that agreement centers on one of them most contentious matters that Congress will soon be addressing, our elected officials in Washington need to pay close attention. Such is the case involving federal tax fairness between small business and large, multinational corporations.

Small business owners are keenly aware that multinational corporations are legally escaping paying much, and often all, of the highly publicized 35 percent U.S. corporate income tax rate. In a poll released early last year by the American Sustainable Business Council (ASBC) and others 80 percent of the small business owners surveyed said that U.S. multinational corporations using accounting loopholes to shift their U.S. profits to offshore tax havens is a problem. Seventy-five percent said that big corporations using tax loopholes harms their own small business.

Accounts of giant businesses like Boeing, General Electric, Pfizer, Microsoft and Honeywell International using offshore tax loopholes to dramatically lower their taxes – often to zero -- are all too common. U.S. Public Interest Research Group just released report showing that each of America’s small businesses on average picks up the tab for $3,067 to cover the costs of tax avoidance by U.S multinational corporations playing the offshore profit-shifting game.

It is clear to small business owners that the ability of these large corporations to minimize their tax liability through offshore tax loopholes is contributing to our nation’s budget problems and is harmful to the small business community. This awareness of multinationals shirking their tax responsibility has resulted in a bipartisan small-business owner consensus on the need of large, multinational corporations to pay their fair share of taxes.

Last month ASBC and the Main Street Alliance (MSA) commissioned a scientific telephone survey of over 500 small businesses across the country. As national business organizations representing small and medium size companies, both ASBC and MSA have advocated for equitable taxation on big business profits to invest in the country’s infrastructure and address the national debt.

Here are some of the overwhelmingly bipartisan consensus results of that ASBC/MSA small-business owner poll just released.

• More than three quarters of small business owners support closing overseas tax loopholes with a unitary combined reporting system:
 75 percent or more of Republican, independent and Democratic small business owners support this approach, which is successfully used by states to stop corporations from shifting the location of profits to avoid taxes.

• More than four out of five small business owners oppose a proposal to institute a territorial tax system (a system that would eliminate U.S. taxes on profits made or shifted offshore):
85 percent of small business owners oppose a proposal for a territorial tax system. Across party lines, at least 67 percent strongly oppose the proposal.

• Small business owners support ending deferral of taxes on foreign profits and requiring US corporations to pay income taxes on income earned overseas:
When asked if foreign earnings of U.S. corporations should be taxed after given credit for foreign taxes paid, 64 percent of small business owners expressed support. Within each party affiliation, at least 62 percent, expressed support.

These results should send a clear signal to Congress and the President from the country’s small business owners. The priority for reforming our nation’s tax code is to stop multinational corporations from using offshore tax havens to avoid paying their fair share of taxes. And these elected leaders are also put on notice to not support any proposal for a territorial tax system for multinational corporations that would lock in what small business owners of all political persuasions view as completely wrong and unfair.

Knapp is vice chairman of the American Sustainable Business Council and president and CEO of the South Carolina Small Business Chamber of Commerce.

Read more: http://thehill.com/blogs/congress-blog/economy-a-budget/292645-small-business-opposes-multinational-corporations-tax-avoidance#ixzz2PznClNww

New Poll of Small Business Owners

Reveals Strong Bipartisan Opposition to Corporate Tax Loopholes

First Poll on Overseas Tax Haven Reforms Finds Rejection of “Territorial” Tax System

April 9, 2013, Washington, D.C. – Small business owners oppose the current system for taxing U.S.-based multinational corporations, according to a new poll. The national scientific poll released today by the American Sustainable Business Council (ASBC) and the Main Street Alliance (MSA) – two national business policy groups – shows that support for reform is bipartisan and widespread.
 

This new poll is the first to query small business owners on specific policies for addressing overseas corporate tax havens. Current tax law enables companies to defer indefinitely taxes on profits earned overseas. The ASBC-MSA poll tested three possible reforms: ending deferral, instituting a territorial system, and establishing combined reporting. The report of poll results may be found here: http://asbcouncil.org/sites/default/files/library/docs/MSA_ASBC_poll_reportTaxesApril2013.

Key findings from the survey include:

·         More than four out of five small business owners (85%) oppose a territorial tax system, which would permanently exempt offshore profits from U.S. taxation. Across party affiliation, 67% or more are strongly opposed to the proposal.

·         76% of small business owners support closing overseas tax loopholes by implementing a unitary combined reporting system, which would limit the ability of corporations to avoid taxes by shifting profits offshore. A majority (55%) are strongly supportive.

·         64% support ending deferral, a provision of current tax code that allows corporations to indefinitely defer payment of U.S. taxes on profits made or shifted offshore. Across parties at least 62% support this idea.

·         By a margin of more than two to one, small business owners prefer to close corporate tax loopholes rather than cut government programs. Both Democratic and Republican small business owners preferred closing loopholes to cutting spending on education, infrastructure or defense.

·         Respondents in the survey were politically diverse, with a strong plurality of Republicans or Independents who lean Republican: 47% identified as Republican or Independent-leaning Republican; 27% as Democratic or Independent-leaning Democratic; and 26% as Independent or other.

"I’m not afraid as a small business to compete with the big boys," said Henry Passapera, a member of the Main Street Alliance and the co-owner of P&R Trading, an international supplier of airline parts and equipment based in East Rutherford, New Jersey. "But when big corporations use offshore tax havens to avoid their tax responsibility, it puts small businesses like mine at a competitive disadvantage.  If you want to fly the American flag at your corporate headquarters, you ought to pay your fair share of taxes."

“All businesses are hurt when we allow tax loopholes for big companies while cutting budgets for public education, research and infrastructure,“ said Josh Knauer, a business leader in ASBC and President and CEO of Rhiza Labs, a Pittsburgh-based software company. “Tax dollars were a vital component in America's past innovations and infrastructure, fostering economic success. The taxes we pay, wisely invested, are the down payments on our future success.”

“Policy makers now have poll data showing that small business owners are strongly against instituting a territorial system, which would make permanent the broken tax system we have now,” said Scott Klinger, Tax Policy Director for ASBC. “Corporate income taxes as a share of the economy are at a 60-year low, and many U.S. multinational corporations pay higher taxes in foreign nations than they do here. So the last thing we should do is lock in an unearned, anticompetitive deal that will hurt the economy as a whole.”

“Small business owners see two problems with the current system for taxing U.S. multinationals,” said Joshua Welter, Director of Special Projects for MSA. “First, they know we can’t afford these loopholes, since the reduced revenue forces cuts in economy boosting investments, such as education, Social Security and Medicare. Second, the overseas tax structure is a big thumb on the scale for big companies, and a thumb at the nose of small business.”

To view the full survey results, visit: http://asbcouncil.org/sites/default/files/library/docs/MSA_ASBC_poll_reportTaxesApril2013.

Poll results reported here represent findings from a scientific national phone survey of 515 owners of small businesses (with 2 to 99 employees), commissioned by the American Sustainable Business Council and the Main Street Alliance and conducted by Lake Research Partners. The nationwide live phone survey was conducted between March 14-25, 2013. It has a margin of error of +/- 4.4%.

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The Main Street Alliance is a national network of state-based small business coalitions. MSA and its state affiliates create opportunities for small business owners to speak for themselves on issues that impact their businesses and local economies. www.mainstreetalliance.org

The American Sustainable Business Council and its member organizations represent more than 165,000 businesses nationwide, and more than 300,000 entrepreneurs, executives, managers, and investors. ASBC informs and engages policy makers and the public about the need and opportunities for building a vibrant and sustainable economy. www.asbcouncil.org