H.R.995 - No Tax Breaks for Outsourcing Act (119th Congress)
Summary
H.R. 995, the "No Tax Breaks for Outsourcing Act," aims to amend the Internal Revenue Code of 1986 to discourage U.S. companies from shifting profits to foreign subsidiaries to avoid U.S. taxes. The bill targets various tax loopholes and incentives that currently benefit companies that outsource jobs and production overseas. It proposes several changes, including current-year inclusion of net CFC (Controlled Foreign Corporation) tested income and country-by-country application of foreign tax credit limitations.
Further provisions include limiting interest deductions for domestic corporations within international financial reporting groups and modifying rules related to corporate inversions. The bill also seeks to treat foreign corporations managed and controlled in the U.S. as domestic corporations for tax purposes.
By closing these loopholes, the bill intends to level the playing field for domestic businesses and encourage investment and job creation within the United States.
Expected Effects
If enacted, H.R. 995 would likely increase the tax burden on multinational corporations that currently benefit from overseas tax havens. This could lead to increased tax revenue for the U.S. government.
The changes could also incentivize companies to bring jobs and investments back to the United States, boosting domestic economic activity. However, some corporations might seek alternative strategies to minimize their tax liabilities, potentially leading to new forms of tax avoidance.
Potential Benefits
- Increased tax revenue for the U.S. government, which could be used to fund public services or reduce the national debt.
- Potential for increased domestic job creation as companies are incentivized to bring operations back to the U.S.
- A more level playing field for domestic businesses that do not engage in outsourcing.
- Reduced incentives for corporate inversions, where companies move their headquarters overseas to avoid U.S. taxes.
- Greater fairness in the tax system by ensuring that multinational corporations pay their fair share of taxes.
Potential Disadvantages
- Increased tax burden on multinational corporations, which could reduce their competitiveness in the global market.
- Potential for companies to seek alternative tax avoidance strategies, leading to increased complexity in the tax code.
- Possible negative impact on U.S. companies' foreign investments and operations.
- Could lead to retaliatory tax measures from other countries.
- Increased compliance costs for businesses as they navigate the complex changes to the tax code.
Constitutional Alignment
The bill's alignment with the Constitution is primarily related to Article I, Section 8, which grants Congress the power to lay and collect taxes, duties, imposts, and excises. By modifying the tax code to prevent tax avoidance, the bill aims to exercise this power more effectively.
The bill does not appear to infringe upon any specific individual rights or liberties protected by the Bill of Rights. However, the complexity of the tax code and its potential impact on businesses could raise concerns about due process and equal protection under the law.
Overall, the bill's constitutional alignment is strong, as it falls within Congress's enumerated powers to regulate taxation and commerce.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).