Q14: Do you support reforming the tax code to reduce the number of loopholes, deductions, giveaways and preferences that allow corporations to substantially lower their tax rates?
Clinton: “We need a more progressive tax system, to make sure that corporations and those at the top pay their fair share.
On the individual side, I will provide middle class tax relief and ask the wealthiest Americans to pay their fair share. That means, among other things, closing loopholes that allow hedge fund managers to pay a lower tax rate than nurses or teachers and supporting proposals like the Buffet Rule, so that millionaires never pay a lower rate than their secretary. In order to pay for my progressive New College Compact, I called for limiting tax expenditures from those at the top. I called for raising the capital gains rate on short-term trading and churning on Wall Street. And I will have more to say on how we can encourage fairness in our tax code.
On the business side, I believe that our economy works best when businesses invest in America for the long term, driving growth, innovation, jobs, and better pay. I firmly believe businesses should get ahead by building a stronger economy here at home, rather than using tax loopholes to shift earnings overseas, or to move abroad to escape paying their fair share. I believe we should close down corporate loopholes, and encourage investment here, in the U.S. During this campaign, I have called for closing down tax expenditures that benefit oil and gas companies, and investing in renewable energy. And I will propose specific steps to prevent inversions, which take advantage of loopholes that litter our tax code, distort incentives for investment, and disadvantage small businesses and domestic firms that cannot game the international tax system. I have urged Congress to act immediately to make sure the biggest corporations pay their fair share, and regulators also should look hard at stronger actions they can take to stop companies from shifting earnings overseas.
Republicans should stop trying to tilt the tax code even further in favor of the super wealthy and the largest corporations and instead join Democrats in supporting these necessary reforms on behalf of U.S. taxpayers. We should come together to encourage investment and job creation here in the United States, not this kind of damaging gamesmanship. As President, I will fight to reform our tax system to reward growth, innovation, and job creation here in the United States.”
Sanders: Yes. “In 1952, the corporate income tax accounted for 32 percent of all federal tax revenue. Today, despite record profits, corporate taxes bring in just 11 percent. Instead of balancing the budget on the backs of the elderly, the children, the sick and the poor, as the Republicans in Congress have proposed, we need a tax system that demands that large, profitable corporations and the wealthy start paying their fair share in taxes. I have introduced the Corporate Tax Dodging Prevention Act in the Senate that would prohibit corporations from avoiding U.S. taxes by shifting their profits to the Cayman Islands and other offshore tax havens. Specifically, this legislation will reform the tax code by:
- Ending the rule allowing American corporations to defer paying federal income taxes on the profits of their offshore subsidiaries. The Congressional Research Service has indicated that the cost of this tax avoidance to the U.S. Treasury approaches or exceeds $100 billion annually. My bill would end this tax avoidance by ending the rule allowing deferral of U.S. income taxes on offshore profits. Under this legislation, American corporations would still be allowed a credit that reduces their federal income tax liability by an amount equal to income taxes paid to foreign governments on these profits. This foreign tax credit exists under current law and already prevents double-taxation of profits.
- Closing loopholes allowing American corporations to artificially inflate or accelerate their foreign tax credits.
- Preventing American corporations from avoiding taxes by using a tax haven post office box as their address. Some companies claim to be based in a tax haven like the Cayman Islands even though their presence in these locations consist of nothing more than a post office box and their actual staff is still located in the U.S. Today, a single five-floor office building in the Cayman Islands is claimed as the address for over 18,000 corporations, demonstrating how easy it is for companies to pretend to be based there. Under my bill, a corporation could not claim to be foreign if their management and control operations are primarily located in the U.S.
- Preventing tax breaks for corporate inversions. Under corporate inversions, an American corporation acquires or merges with a (usually much smaller) foreign company and then claims that the newly merged company is a foreign one for tax purposes — even though the majority of the ownership is unchanged and little or no personnel or operations have actually moved offshore. Under my bill, the U.S. would continue to tax such a company as an American corporation so long as it is still majority owned by the owners of the American party to the merger or acquisition.
- Preventing foreign-owned corporations from stripping earnings out of the U.S. by manipulating debt expenses.
- Preventing large oil companies from disguising royalty payments to foreign governments as foreign taxes. U.S. oil and gas companies have been disguising royalty payments to foreign governments as foreign taxes in order to claim foreign tax credits. My bill would close this loophole which amounts to a U.S. subsidy for foreign oil production for the five largest oil companies.
Our nation cannot survive morally or economically when so few have so much while so many have so little. We need a tax system which asks the billionaire class to pay its fair share of taxes and which reduces the obscene degree of wealth inequality in America.”
Carson: I am in favor of a tax code that is flatter and fairer and eliminates loopholes for individuals and corporations.
Q15: Do you support retaining the earned income tax credit?
Clinton: “I support retaining and expanding the earned income tax credit, as I have for decades.”
Sanders: Yes. “In Congress, I have co-sponsored legislation to increase the Earned Income Tax Credit (EITC). This year my Republican colleagues in Congress took aim at cutting the EITC. At a time when we have over 46 million Americans living in poverty – more than at any time in the modern history of this country, my Republican colleagues think we should increase that number by cutting the Earned Income Tax Credit. I strongly opposed such actions and will continue to oppose them as the President of the United States.”