On Thursday, Rep. Mark Pocan (WI-D) introduced the Corporate Transparency and Accountability Act, a bill which would require all publicly-traded multinational companies to disclose their revenues, profits, taxes, and certain other operations information on a country-by-country basis (CbCR) to the Securities and Exchange Commission (SEC). The measures in the bill are similar to the rules adopted by the Internal Revenue Service (IRS) earlier this year with the key difference being that this information would be available to the general public.
By requiring CbCR, passage of the bill would represent a major gain in the battle to end the practices of base erosion and profit-shifting in the corporate world. This information will help governments to identify the shady accounting practices companies use to minimize their tax obligations and combat those practices through responsible changes to the tax code.
Advocates have long been calling for the SEC to voluntarily adopt these rules, but there has been significant pushback from corporate and financial interests. That being said, there is evidence that even the largest financial interests are beginning to realize that they are fighting a losing battle. Earlier this year, Goldman Sachs sent a memo to investors telling them to “Buy stocks with high US sales and high effective tax rates and avoid firms with high foreign sales and low tax rates,” indicating at least one major firm believes that the lax financial regulations that have allowed multinationals to amass $2.4 trillion offshore are coming to an end.
The public and investors alike would benefit a great deal from the passage of Rep. Pocan’s bill because it would provide much needed transparency on the level of corporate taxes that companies are paying throughout the world.
Aaron Mendelson, an ITEP intern, contributed to this report.