U.S. Sen. Brian Schatz helped introduce legislation Tuesday to safeguard military retirees from changes in cost of living adjustments (COLA) in the bipartisan budget agreement.
The proposal would be fully-paid for by eliminating a corporate tax loophole for companies that use offshore tax havens to avoid paying U.S. taxes.
“The budget agreement is an important step forward for our country – it protects jobs in Hawai‘i and instills economic certainty, finally rolling back the devastating sequester cuts and stopping billions of dollars’ worth of cuts from taking effect,” Schatz said.
“But we can work together to make it better and I believe this is one important way to do so,” he said. “The legislation we’re working to pass would preserve military retiree benefits and pay for it by closing an offshore tax haven loophole that some companies are using to avoid paying U.S. taxes.”
Currently, companies that are incorporated offshore but managed and controlled from the United States can claim foreign status which helps them avoid paying U.S. taxes.
Schatz’s Military Retirement Restoration Act would replace the estimated $6 billion in expected savings from military retiree cost of living adjustments with an estimated $6.6 billion raised by eliminating a this tax loophole for offshore corporations.
The legislation, sponsored by Jeanne Shaheen (D-NH), is also co-sponsored by Senators Jack Reed (D-RI), Mark Warner (D-VA), Tom Udall (D-NM), Al Franken (D-MN), Mazie Hirono (D-HI), Bernie Sanders (I-VT), Richard Blumenthal (D-CT), Jeff Merkley (D-OR), Elizabeth Warren (D-MA), Tim Kaine (D-VA), Angus King (I-ME), Mark Begich (D-AK), Mark Udall (D-CO), and Amy Klobuchar (D-MN).