Sinner takes aim at loopholes benefiting big business
FARGO -- George B. Sinner, Democratic candidate for North Dakota's sole U.S. House seat, said Thursday that the U.S. tax code too often favors big businesses at the expense of small businesses and farmers, and he aims to fix that.
FARGO - George B. Sinner, Democratic candidate for North Dakota’s sole U.S. House seat, said Thursday that the U.S. tax code too often favors big businesses at the expense of small businesses and farmers, and he aims to fix that.
If elected, he said at a news conference, he would close tax loopholes that, among other things, allow companies with foreign branches to move income overseas and avoid American taxes.
His campaign estimated that closing the loopholes would provide $503.4 billion more to the U.S. Treasury over a decade.
Sinner said he wants to see some of the money permanently fund incentives allowing small businesses and farmers to deduct up to $500,000 a year for new equipment, with the rest used to balance the budget.
“Too often, small businesses are being burdened by a tax code that directly benefits multimillion- and billion-dollar corporations,” said Sinner, a Fargo banker and state senator. “Too many of them are able to exploit areas of our tax code to avoid paying their fair share, leaving American taxpayers to pick up the slack.”
The GOP-controlled House, including his Republican opponent Kevin Cramer, approved the incentives in June.
But Sinner said the House bill didn’t identify funding for the estimated $73 billion the incentives would cost over a decade and it went nowhere in the Senate, controlled by Democrats.
Cramer could not be reached for comment.
Sinner’s proposals would close three loopholes:
- One allows businesses to deduct fines as a business expense, which Sinner said Exxon did after it was fined for the 1989 Exxon Valdez oil spill in Alaska. His campaign said closing this loophole would raise $372 billion over 10 years.
- Another loophole allows investment-fund managers to pay lower taxes when compensated with “carried interest,” meaning a share of the fund’s profits. The shares are taxed as gains from investments, which are lower than income taxes. Closing this loophole would raise $17.4 billion over 10 years.
- A third loophole allows companies to avoid paying taxes on income earned by their foreign branches. Sinner said the companies just report their U.S. income as if it came from the foreign branches, paying foreign taxes on them. Closing this loophole would raise $114 billion over 10 years.
While some might argue companies are shifting income overseas because the U.S. corporate tax rate is too high, Sinner said it’s not 35 percent, as commonly reported. Including various incentives, the tax rate is closer to 12 to 15 percent, he said.
The consulting firm KPMG pegged the U.S. corporate tax rate at 40 percent this year, including state and local taxes. The tax rate is 12.5 percent in Ireland, where Minnesota-based Medtronic plans to move its headquarters to lower its taxes, and 26.5 percent in Canada, where Burger King plans to move.
The Congressional Budget Office has warned that not allowing U.S. companies to shift income to foreign branches could backfire if more companies respond by moving overseas.
Sinner said in a statement after the news conference that he doesn’t see a “mass exodus” of companies because they benefit more from being in the U.S. where their market is. “The reforms I’m proposing would have a big impact on our national deficit but would not place any undue burden on multibillion-dollar corporations.”