Tax Extender Legislation & Corporate Tax Dodging

GEGraphicDelaware ADA sent a joint letter to our Congressional delegation, signed by nine Delaware organizations, which calls for Congress to pass tax extenders that help average people, but not extend the following two expired tax breaks that together cost the U.S. $8 billion each year: the Subpart F Active Financing Exception and the CFC Look Through Rules.

Delaware ADA also sent on a joint report by Public Campaign and Americans for Tax Fairness, Corporate Lobbying on Tax Extenders and the GE Loophole, which details that between January 2011 and September 2013, 1,359 lobbyists representing 373 corporate entities pressed Congress on tax-extender legislation.

Oppose Offshore Corporate Tax Loopholes in Tax-Extenders Legislation

April 1, 2014

Dear Senator Carper, Senator Coons, and Congressman Carney:

We are writing to urge you to not renew two big corporate tax loopholes worth $80 billion over 10 years that give tax breaks to companies that ship profits and jobs offshore. These two temporary loopholes – known as the Active Financing Exception and the CFC Look-Through Rule – are expired tax-extenders that primarily benefit a small number of multinational corporations. We also urge you to pay for any other temporary corporate tax breaks that may be renewed in the tax extenders bill by closing other corporate tax loopholes.

The Active Financing Exception and the CFC Look-Through Rule are part of a package of tax breaks – known as tax extenders –which expired at the end of 2013. The cost of renewing these tax extenders is between $410 billion and $690 billion over 10 years, according to the Congressional Budget Office. About 90 percent of the total costs benefit corporations.

These two tax loopholes allow companies to stash profits offshore so they can avoid paying taxes in the United States:

Subpart F Active Financing Exception (Cost: $62.5 billion over 10 years or $6 billion a year). This loophole lets corporations (primarily financial institutions such as GE Capital, Wall Street banks and insurance companies) avoid paying taxes to any nation on their financial income they earn (or claim to earn) in foreign countries, so long as those profits remain officially offshore. [See Citizens for Tax Justice and Americans for Tax Fairness fact sheets] This is part of the reason that GE, which made $27.5 billion in profits from 2008-2012, got a total of $3.1 billion in federal tax refunds and paid an effective tax rate of minus 11.1 percent over that period, according to Citizens for Tax Justice.

Controlled Foreign Corporations (CFC) Look Through Rules (Cost $17.5 billion over 10 years or $2 billion a year): This loophole allows multinationals to create transactions purely for “earnings stripping” – to create dividends, interest, rents, and royalties to strip active income out of high-tax countries and move it into low-tax or no-tax countries without incurring any U.S. tax liability (or any tax liability anywhere). The rules also allow U.S. multinationals to create “stateless income,” which is treated, for tax purposes, as earned in a low-tax (or no-tax) country, where the company’s operations may consist only of renting a mailbox, instead of in the countries where the employees and assets are located. [See Citizens for Tax Justice and Sen. Carl Levin Section 304]

There are some tax extenders that help average people. For instance, there’s a tax deduction for certain school expenses incurred by teachers, tax breaks for employees who ride mass transit to work, tax relief for people who are taking a loss by selling their homes that have underwater mortgages. The costs of some of these tax breaks are relatively very small compared to the corporate tax breaks described above.

Corporate tax breaks drain much-needed revenue from the economy and waste money that could be better spent improving our schools, rebuilding roads and bridges, researching new medical cures – or reducing the deficit. [See Economic Policy Institute Issue Brief].   Every dollar in extender tax breaks that goes to GE, Wall Street banks, or to wealthy NASCAR race track owners and to thoroughbred breeders in Kentucky, is a dollar not available to feed the hungry, educate our children, or invest in jobs.

We urge you to apply the same set of rules to corporate tax loopholes as was recently applied to funding emergency unemployment benefits. Conservatives in Congress demanded that those benefits be paid for by cuts to other programs. They demanded that $40 billion be cut from Food Stamps to reduce the deficit, and that any increase in spending under the recent adjustments to the budget sequester be paid for by equal cuts in other spending. Surely, the same standard should be applied to a tax-extenders package that includes huge special-interest tax breaks—these tax breaks must be paid for and should be paid for by closing other corporate tax breaks.

In conclusion, we ask you to do two things with respect to tax extenders legislation:

1)    Do not renew the two tax loopholes that allow companies to ship profits and jobs offshore and dodge $80 billion in taxes over 10 years.

2)    Do not renew other corporate tax extenders unless the costs are offset by closing other corporate tax breaks.

Big corporations need to start paying their fair share of taxes. A good place to start is with tax-extenders legislation.


  • Americans for Democratic Action, Delaware chapter
  • Coalition to End Hunger
  • Coalition of Black Trade Unionists, Delaware chapter
  • Delaware Alliance for Community Advancement
  • Delaware Ecumenical Council on Children and Families
  • Delaware Public Employees Council 81 AFSCME
  • Food Bank of Delaware
  • Progressive Democrats for Delaware
  • SEIU

Fast Food Forward Action Tomorrow!

The next event of Delaware Fast Food Forward is tomorrow, Thursday, April 3, at 1pm outside the McDonald’s on W 4th Street in Wilmington.  Come see some street theatre (hint: Ronald McDonald is going to get mock arrested for wage theft!), participate in some chanting, and hear from community leaders, including Delaware ADA president Jenna Fenstermacher, DACA E.D. Darlene Battle, Reverend Donald Morton, Delaware AFL-CIO President Sam Lathem, and Wilmington Council Members Sherry Dorsey Walker and Michael Brown!April3EventFlyer_Color

Inequality for All

This Tuesday, April 1, Delaware ADA is joining Common Cause Delaware, the Dover Public Library, Kent County Progressives, League of Women Voters of Delaware, and Pacem in Terris for a film screening of Inequality for All, Bob Reich’s film about economic inequality.  The film screening is at 11am at the Dover Public Library and will be followed by a discussion led by Representatives Andria Bennett and Trey Paradee.

Minimum Wage

Congressman Carney is a co-sponsor of the Fair Minimum Wage Act of 2013.  Senator Coons publicly supports the bill.  Senator Carper is not there yet, so today 14 leaders of community organizations sent his office this joint letter:

25 March 2014

Dear Senator Carper,

We are writing to express our strong support for the Minimum Wage Fairness Act (the Harkin-Miller legislation, S. 1737) to raise the federal minimum wage to $10.10 an hour.  We encourage you to support this legislation, which is crucial to the health and well being of Delaware’s economy and its families, and to resist any efforts to weaken its core provisions.

As you know, the Harkin-Miller bill would raise the federal minimum wage to $10.10 by 2016, adjust the minimum wage each year to keep pace with the rising cost of living starting, and raise the federal minimum wage for tipped workers to 70% of the minimum wage.

Our organization works with many vulnerable Delaware families, and so we know firsthand about their economic struggles. The Great Recession may have officially ended, but low-wage occupations have dominated job growth in the post-recession recovery, forcing many families to get by with less.  Meanwhile, in the past 40 years the federal minimum wage has lost more than 30% of its value and would today be more than $10.60 per hour if it had kept pace with the cost of living.  The federal minimum wage for tipped workers – $2.13 per hour – has not increased in over 20 years.

Raising the minimum wage will go a long way toward creating a more sustainable economy in Delaware and around the country.  According to estimates by economists, if the bill becomes law nearly 28 million workers would receive a raise either directly or indirectly, including 78,000 Delaware residents – more than 60% of them women.  Nearly 40,000 of Delaware’s children have a parent that would receive a raise as a result of the legislation.  Nationally, low-end estimates show that nearly 1 million people would be lifted out of poverty, with some economists projecting the total at nearly 5 million.

Raising the tipped wage is a key part of this, because it will cushion the impact of extreme fluctuations in income for tipped workers like waiters/waitresses, hairdressers, and airport wheelchair attendants – whose median age is 31 and who are 2/3 female.

And in helping these vulnerable workers, we boost the broader economy – which benefits all of us.  Over 600 economists – including 7 Nobel laureates – support raising the minimum wage to $10.10 and agree that it would add 80,000 jobs – not reduce them – and generate $22 billion in new economic activity as a result of additional consumer spending.  Polls show that two-thirds of small business owners support raising and indexing the federal minimum wage because it would reduce turnover, increase productivity and boost customer demand.

The Fair Minimum Wage Act of 2013 is long overdue legislation that will improve the lives of Delaware residents.  I hope we can count on you to vote for the bill and fight any attempts to water down the key provisions mentioned above.

Thank you for your consideration and I look forward to your reply.


Darlene Battle, Executive Director
Delaware Alliance for Community Advancement

Patricia Beebe, President/CEO.
Food Bank of Delaware

Mike Begatto, Executive Director

Delaware Public Employees Council 81 AFSCME

Joanne Cabry, President
Progressive Democrats of Sussex County

Daisy Cruz, Mid-Atlantic District Director


Jenna Fenstermacher, President
Americans for Democratic Action, Delaware Chapter

Reverend Robert Hall, Executive Director
Delaware Ecumenical Council on Children and Families

Maria Matos, President & CEO
Latin American Community Center

Jason Melrath, President
Progressive Democrats for Delaware

Melvin Phillips, President
Coalition of Black Trade Unionists, Delaware Chapter

Rebecca Powers, President
National Organization for Women, Delaware Chapter

Rashmi Rangan, Executive Director
Delaware Community Reinvestment Action Council, Inc.

Dan Reyes, Coordinator
Coalition to End Hunger

Richard Smith, President
Delaware State NAACP Conference of Branches

ADA Chapter Meeting March 26

6pm Wednesday March 26 at the Hockessin Public Library

Due to holidays and weather, this will be our first chapter meeting since October. What have our chapter and committees been up to in the meantime? What’s on the horizon? This is a meeting not to miss.

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Our guest speaker for the meeting is Dan Reyes, Coordinator of the Coalition to End Hunger, an initiative of the Food Bank of Delaware. He will talk about food insecurity in Delaware and the programs and policies like fair wages that help with food security.

Because the Newark City Council candidates forum is at 7:30pm, we wanted to be as accommodating as possible. So please note our chapter meeting is at 6pm, not 7pm, and there will not be an Economic Justice Committee meeting that evening. The Economic Justice Committee will finish their plans for ADA’s April 12 “Tax Day” event outside of a formal committee meeting.