* Levin circulates list of specific tax ideas to colleagues
* Automatic spending cuts will be 'disaster,' he says
By Kim Dixon
WASHINGTON, Jan 29 (Reuters) - Senator Carl Levin for years tried to close U.S. corporate tax loopholes but failed to persuade many fellow Democrats. With an ax now looming over all federal spending, the veteran Michigan lawmaker hopes to gain some converts.
Levin's committee on investigations has long used its subpoena power to produce reports on corporate tax avoidance and wrongdoing. His panel, which has oversight over government operations, has no power to enact tax law, and neither tax-writers nor Senate leadership have taken up his cause.
It may be an uphill climb for Levin's ideas to win passage, given the lack of backing from Senate leadership and Max Baucus, the chairman of the Senate Finance Committee, in the past. His last plan for tightening the corporate tax regime would have raised about $150 billion over 10 years.
Levin has previously sought to expand the Treasury Department's power to battle tax haven banks and countries that help the wealthy hide taxes, and to curb incentives for U.S. companies to move jobs overseas and to transfer intellectual property offshore.
A six-term senator better known as chairman of the Armed Services Committee, Levin will again in coming weeks introduce legislation to close tax loopholes. It will be part of an effort to head off the sequester looming on March 1 when $85 billion in indiscriminate spending cuts will be imposed across nearly all federal programs.
"It is kind of gelling," Levin said in a hallway interview on Tuesday. "I've circulated now to our chairmen in the caucus a list that is very specific, a discrete list," of proposals on corporate tax avoidance.
Levin says the threat of deep cuts to domestic and defense spending could bring new converts.
"It would be a disaster," Levin said of the sequester's impact. "It is mindless."
Many of Levin's ideas are expected to be reprised in President Barack Obama's budget proposal, expected within weeks.
Democratic Senate Majority Leader Harry Reid on Tuesday said averting the sequester should include more targeted spending cuts and new revenue.
Reid specifically mentioned oil companies, another Obama target, but not one Levin has focused on.
The majority leader earlier this month introduced a non-binding "Sense of the Senate," titled the End Wasteful Tax Loopholes Act, which Levin signed onto.
The one-page document got little attention when introduced, but it calls for cutting "wasteful tax loopholes that create incentives for taxpayers to engage in transactions that have no economic substance solely (in order) to lower tax bills."
Other provisions in Levin's last effort include establishing a presumption that a corporation formed by a U.S. taxpayer is considered under that taxpayer's control for tax purposes, and disallowing companies from accounting for stock options in one way to tax authorities and another way on their financial statements.
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