Credo Action

Tell President Obama: End tax giveaways to the 1%

Sign the petition

Petition to President Barack Obama:

"Use your executive authority to direct the Treasury Department and the Internal Revenue Service to end tax giveaways to large corporations, multimillionaire hedge fund managers, and the worst of the 1% that will cost America more than $100 billion over the next decade, including the “check-the-box,” “earnings stripping,” “valuation discount,” “carried interest,” “Hewlett-Packard,” and “Real Estate Investment Trust” tax loopholes."

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    Tell President Obama: End tax giveaways to the 1%

    Just in time for tax day, Senator Bernie Sanders has figured out how President Obama can close massive tax loopholes with a few strokes of a pen, and he needs our help.

    In a recent letter to President Obama, Senator Sanders outlined six loopholes that massive corporations, hedge fund managers, and the worst of the 1% use to dodge taxes and avoid paying us back for providing roads, courts, and an educated workforce.1

    Closing all six loopholes would raise more than $100 billion that could be invested in America – and best of all, the President can do it all without Congress.

    Tell President Obama: End tax giveaways to the 1%.

    The list of loopholes that the worst of the 1% use to avoid taxes reads like a “how-to” guide for multimillionaire hedge fund managers and multinational corporations trying to rip off a nation:

    • The “check-the-box” loophole. Simply by checking one box, companies can claim that an entity it owns should be ignored by the IRS for tax purposes. By giving different stories to different governments, they can transfer profits between subsidiaries tax free. Closing this loophole would raise up to $78 billion over the next decade.2

    • The “Hewlett-Packard” loophole. Companies are supposed to pay taxes when they bring offshore profits back to America. But if their offshore subsidiaries only provide a short-term “loan” to the onshore parent company, they can dodge the law. At one point, Hewlett-Packard was found to be “borrowing” billions, tax-free.3

    • The “Real Estate Investment Trust” loophole. Real estate investment trusts are like mutual funds for real estate, and they don’t pay corporate income tax. But all sorts of companies, from private prisons to casinos, now claim to be real estate investment trusts in order to dodge taxes.4

    • The “carried interest” loophole. Wealthy investors pay hedge fund managers billions to manage their money. But this loophole allows those fund managers to pretend that their income is actually a capital gain from selling investments – and capital gains are taxed at a far lower rate. Closing this loophole would raise up to $18 billion.5

    • The “earnings stripping” loophole. CREDO members have fiercely fought corporate inversions, where big U.S. companies merge with a smaller foreign company to avoid paying taxes. The Treasury Department has already cracked down on one tax dodge related to inversions, and closing the other, the “earnings stripping” loophole, could raise up to $13 billion over the next decade.6

    • The “valuation discount” loophole. If wealthy parents put a restriction on selling a company before transferring it to their children, it is considered less valuable and so they pay less in taxes – even if that restriction is then removed or ignored. The IRS could overlook these meaningless restrictions and raise up to $18 billion over the next decade.7

    Tell President Obama: End tax giveaways to the 1%.

    The Internal Revenue Service created the first three loopholes by accident, with administrative rulings that had unintended consequences – and President Obama could easily order the IRS to fix its mistake. The other three could be closed if the Treasury Department used its existing authority to call hedge fund managers “service providers” and issued new rules under the tax code.8

    The Obama administration has likely held off on making these changes in order to meet Republican demands that any new investments be “paid for” by closing a loophole. But with a new, right-wing Congress adamantly opposed to any new spending or tax increases, the time for bargaining chips is over. President Obama needs to know that if he takes a bold stand in favor of tax fairness, Americans will stand with him.

    Tell President Obama: End tax giveaways to the 1%.

    Thank you for speaking out,

    1. Sanders Asks Obama to Close Six Egregious Corporate Tax Loopholes,” Sanders.Senate.gov, March 3, 2015.
    2. Potential Executive Actions to Close Tax Loopholes,” Budget.Senate.gov, Retrieved April 6, 2015.
    3. Ibid.
    4. Ibid.
    5. Ibid.
    6. Ibid.
    7. Ibid.
    8. Ibid.