America’s Health Insurance Plans (AHIP) — the insurance industry’s lobbying arm — is hosting a health care policy forum in Washington D.C. This is the third of a series of posts from inside the conference.
At the AHIP conference today, ThinkProgress asked Sen. Orrin Hatch (R-UT) about some issues other than health care, and Hatch wound up expressing his distaste for the Obama administration’s tax policy. In particular, Hatch railed against Obama’s tentative proposal to no longer allow U.S.-based companies to defer paying taxes on profits made overseas:
The Obama approach is to tax the profits of domestic corporations overseas. I can’t tell you — companies are going to leave. I had one of the leading pharmaceutical company’s leaders tell me, he said, if that goes through we’re moving to Switzerland, we’re moving the whole company. We’ve lost a lot of our Fortune 500 companies because of these stupid, dumb-ass tax laws. And they are really stupid.
Actually, by only taxing these profits when they are repatriated to the U.S. — but leaving them untaxed overseas — the government is encouraging overseas investment and the exporting of jobs. As James Kvaal explained:
The United States does not tax foreign profits unless they are returned to the United States. Alongside low tax rates in some foreign countries, the result is a strong incentive to invest overseas. As many as 3 million American jobs have been moved offshore, and the U.S. Treasury loses tens of billions of dollars a year in offshore tax evasion.
The Joint Committee on Taxation has found that the failure to tax foreign income of U.S. controlled corporations will cost the government $56.4 billion in lost tax revenues between 2008 and 2012.
Closing these offshore loopholes can’t be done on a unilateral basis, however. The U.S. needs to work with its allies abroad to confront tax havens and prevent harmful tax competition, as “we all have an interest in protecting our economy, collecting the taxes that are owed, and maintaining the progressive nature of our tax codes.” In any case, the status quo, which costs the U.S. tax revenue and jobs, is unacceptable.