U.S. Senator Carl Levin said the congressional focus on reducing the federal budget deficit should enhance the chances for passage of legislation to crack down on offshore tax havens.
Improving offshore tax enforcement would allow the U.S. Treasury to recoup a significant chunk of an estimated $100 billion in revenue that Levin said is lost annually to “offshore trickery and tax shelter abuses.” He made the remarks today at a press briefing unveiling the legislation.
Levin, a Michigan Democrat, heads the Senate Permanent Subcommittee on Investigations, which has examined offshore transactions for the past decade. He has introduced similar legislation in four previous congressional sessions.
“Our great hope is that deficit discussions will give it momentum,” Levin said.
The bill’s 18 provisions include several that would require improved reporting of offshore transactions by banks and corporations, and allow for more tax information-sharing among U.S. regulatory agencies.
The legislation would require that corporations registered with the Securities and Exchange Commission annually disclose country-by-country figures for employees, sales, financing, tax obligations and tax payments.
The bill would treat non-U.S. corporations that are publicly traded or have $50 million or more in assets and are managed and controlled primarily from the U.S. as U.S. corporations for income tax purposes.
It also would treat credit-default swap income payments sent offshore from the U.S. as taxable U.S. income. Levin said U.S. regulators currently treat such payments as coming from a foreign source.
“It’s absurd that you source money where it’s received instead of where it comes from,” he said.
Levin declined to comment on recent reports that the Permanent Subcommittee on Investigations has sent letters seeking information on how certain U.S. corporations, including Cisco Systems Inc. and DuPont Co., would use offshore cash if they were able to bring it into the U.S. at a low tax rate.
Cisco, along with Google Inc., Apple Inc. and Pzifer Inc., are lobbying Congress for a tax holiday that would allow them to bring home overseas profits while paying a tax rate lower than the current 35 percent top U.S. corporate rate.
Levin, who opposes a tax holiday, said the letters are part of an investigation and “a report is about to be issued on that subject.”