Effort in Senate to Close Offshore Tax Havens
By DAVID KOCIENIEWSKI
NYT
Saying that offshore tax havens deprive the United States Treasury of tens of billions of dollars of revenue a year, two senior Democratic senators are pushing to help reduce the federal deficit by tightening rules that allow hedge funds, derivatives traders and corporations to skirt federal taxes.
A bill unveiled Tuesday by Senator Carl Levin, chairman of the permanent subcommittee on investigations, would change Internal Revenue Service regulations that allow American traders of credit-default swaps to avoid paying federal taxes on many transactions that begin in the United States. It would also tighten rules that enable some hedge funds and corporations based in the United States to reduce their federal tax liabilities by declaring themselves foreign companies and moving a small part of their operations overseas.
In an effort to discourage companies from using bookkeeping maneuvers to shift their profits to tax havens, the measure would also require American corporations to provide the Securities and Exchange Commission, and the public, with a country-by-country breakdown of their sales, employment and operations.
Senator Levin, a Michigan Democrat who has spent years investigating tax avoidance schemes, estimates that abuse of offshore havens costs the Treasury more than $100 billion a year and said his proposal could provide a breakthrough in the stalled deficit-reduction negotiations between President Obama and Congress. Mr. Obama has refused to approve a deal that does not include increased revenues, and Republicans have said they will oppose any measure that increases taxes. Mr. Levin said his plan offers a compromise by closing loopholes used by corporations and investors, many of whom have continued to reap profits during the economic downturn while minimizing tax liability.
(More here.)
NYT
Saying that offshore tax havens deprive the United States Treasury of tens of billions of dollars of revenue a year, two senior Democratic senators are pushing to help reduce the federal deficit by tightening rules that allow hedge funds, derivatives traders and corporations to skirt federal taxes.
A bill unveiled Tuesday by Senator Carl Levin, chairman of the permanent subcommittee on investigations, would change Internal Revenue Service regulations that allow American traders of credit-default swaps to avoid paying federal taxes on many transactions that begin in the United States. It would also tighten rules that enable some hedge funds and corporations based in the United States to reduce their federal tax liabilities by declaring themselves foreign companies and moving a small part of their operations overseas.
In an effort to discourage companies from using bookkeeping maneuvers to shift their profits to tax havens, the measure would also require American corporations to provide the Securities and Exchange Commission, and the public, with a country-by-country breakdown of their sales, employment and operations.
Senator Levin, a Michigan Democrat who has spent years investigating tax avoidance schemes, estimates that abuse of offshore havens costs the Treasury more than $100 billion a year and said his proposal could provide a breakthrough in the stalled deficit-reduction negotiations between President Obama and Congress. Mr. Obama has refused to approve a deal that does not include increased revenues, and Republicans have said they will oppose any measure that increases taxes. Mr. Levin said his plan offers a compromise by closing loopholes used by corporations and investors, many of whom have continued to reap profits during the economic downturn while minimizing tax liability.
(More here.)
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