BUSINESS
02/27/2013 05:46 pm ET Updated Feb 27, 2013

Senator Bernie Sanders Accuses Wall Street Of Avoiding Taxes By Stashing Cash Overseas

One senator is accusing Wall Street banks of setting up offshore subsidiaries to avoid paying U.S. taxes.

In a statement on the Senate floor Wednesday explaining why he would vote against confirming Treasury Secretary nominee Jack Lew, Sen. Bernie Sanders (I-Vt.) accused Bank of America, Citigroup, JPMorgan Chase and Goldman Sachs of avoiding U.S. taxes. Lew, who worked at Citi when the bank received a bailout, was confirmed by a Senate panel Tuesday.

“When it comes to paying their taxes, oh, suddenly they love the Cayman Islands,” Sanders said of Wall Street banks, according to a transcript posted on his website. “So my suggestion is, the next time these crooks destroy their banks and they need to be bailed out, let them go to the government of the Cayman Islands to get their bailout.”

Citigroup and Goldman Sachs did not immediately return emails from The Huffington Post seeking comment Wednesday afternoon. JPMorgan Chase declined to comment.

Jerry Dubrowski, a spokesman for Bank of America, called Sanders' claims "flat out wrong." He said that while the bank does have subsidiaries in the Cayman Islands, it pays the U.S. corporate tax rate of 35 percent on the income earned there.

"It's not to avoid paying taxes," he said of the Cayman Islands subsidiaries. "It's where our clients do business."

Six big banks -- including the four named by Sanders -- paid an effective tax rate of 11 percent in 2009 and 2010, according to a report from non partisan Public Accountability Initiative. The maximum effective corporate tax rate is 35 percent.

Sanders, a self-described socialist and outspoken opponent of Wall Street, leveled these accusations against Wall Street before, including in a blog for The Huffington Post. In the post, he accused the banks of setting up hundreds of foreign subsidiaries in order to avoid paying billions in U.S. taxes.

The banks are just four of many companies that have been accused of using such loopholes -- like stashing profits overseas -- to avoid paying taxes in the U.S. A September Senate report alleged that Google, Apple and Microsoft avoided paying billions in taxes through potentially illegal schemes to move money overseas. In addition, 30 of America’s most profitable companies paid “less than zero” in income taxes between 2008 and 2010, according to a report from the Center for Tax Justice.

President Barack Obama addressed the issue in his State of the Union speech earlier this month, proposing an “offshoring tax” that would set a minimum tax on offshore profits.

This post has been updated to include comment from Bank Of America.

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