Obama Helping Lobbyists Weaken Offshore Tax Crackdown Dems Passed in 2002 Over GOP Opposition

One of the few - and I sincerely stress the word few - concrete legislative successes progressives notched in the Republican Congress under President George W. Bush came on the evening of July 26th, 2002, when they humiliated the House into passing a bill sponsored by Rep. Rosa DeLauro (D-CT) banning federal contracts from going to companies that engage in tax "inversions." These are the schemes whereby a corporation that is based in the United States buy a P.O. box in Bermuda and use it to legally avoid paying American taxes.

The bill, reported Congressional Quarterly at the time, "was expected to fail [but] when the 15-minute voting clock ran out, DeLauro's amendment was five votes ahead." Ultimately, industry-owned Republican legislators who had tried to vote down the measure realized they weren't going to be able to stop it, and "after a nod from Republican leadership, more than 100 Republicans recast their votes to give DeLauro an avalanche victory." Having witnessed this firsthand on the floor of the House, I can tell you it was indeed a sight to see.

And yet in the now-Democratic Congress seven years later, with deficits exploding and the government clearly needing to strengthen any and all incentives for corporations to pay their taxes, I was more than disheartened to read this story in the Hill newspaper this week:

Multinational corporations are fighting to preserve language in a spending bill that would weaken a ban on federal contracts.

The provision, inserted in the Senate version of the bill at the request of the Obama administration, would weaken a ban on federal contracts for inverted companies...

Before the ban began in 2002, four of the 100 largest federal contractors were inverted, according to a Government Accountability Office (GAO) report.

In 2001, those four companies received $2.7 billion in federal contracts, but they have unable to win the contracts since the ban was put into place.

The Obama administration is justifying its push on the grounds that the ban may - at some point in the undetermined future - conflict with our trade agreements. It's a charge North Dakota Sen. Byron Dorgan (D) rightly calls "absurd."

What this is all about is corporate lobbying against provisions that both use taxpayer money to reward domestic companies that pay their fair share of taxes and disincentivize companies from trying to rip off the public through offshore "inversions." And it's one of the first examples we've seen of the Obama administration and the Democratic Congress potentially doing something even worse than the Bush administration and the Republican Congress.

Here we have a commonsense progressive tax measure that Democrats managed to pass and then expand under Bush and the GOP, and here we are less than a year into an era of full Democratic control of Washington watching Democrats aiming to weaken that tax measure. When you look at this move and remember that candidate Barack Obama himself promised to strengthen - not weaken - laws cracking down on offshore tax rip-off schemes, you wonder why we even waged that tough progressive fight back in 2002.

You wonder, in short, whether you are getting sold down the river.

 

Comments

[zanzig]

"inserted in the Senate version of the bill at the request of the Obama administration,"

I'm sorry but that seems too vague an attribution for me to believe anything you have said. How about some facts? You were certainly quick enough to provide a link to what Senator Obama said while on the campaign trail.

[mjc]

Obama's "team" is counting on this kind of information to NOT become public. I can still remember during the primary campaign Obama's PR whores talking about Obama not taking any money from the K Street groups and how he wouldn't dream of having corporate interests finance HIS campaign. And the damn media published that stuff like it was God's only truth. As some one else has written here, George Bush's third term is going full steam.

[Hdaryl01]

Historic American companies are leaving the U.S., and have been for years. Before, during, and after the "crackdown". Because, the U.S. has the most draconian taxation system on the planet-based on worldwide income. Other jurisdictions are more favorable, for more reasons than just taxation.

The following have "left" the U.S.:

1) Weatherford Internatio­nal-Switze­rland
2) Halliburton-to Dubai
3) Tyco Internatio­nal-Switze­rland
4) Foster Wheeler-Switzerland
5) Transocean Internatio­nal-Switze­rland
6) Ingersoll-­Rand-Irela­nd

These corporations are no longer U.S. Corporations, and do not owe U.S. tax on worldwide income. Thus, we now get 100% of nothing based on worldwide income...o­bviously, we get tax on any exclusively U.S. income, but this can be easily reduced through transfer pricing for a foreign corporation.

The following corporations generate well over 50% of their revenues "offshore":
1) Colgate-Palmolive Co. (CL) – 77% Non-U.S. Revenues
2) Chevron Corporation (CVX) – 56% Non-U.S. Revenues
3) McDonald’s Corporation (MCD) – 66% Non-U.S. Revenues
4) The Coca-Cola Company (KO) – 75% Non-U.S. Revenues
5) 3M Co. (MMM) – 64% Non-U.S. Revenues
Etc.

Are these companies "American"? What would they lose by leaving? Don't they actually owe consideration of it to their shareholders?

Obama, and the rest understand that they are hamstrung-squeeze harder, and the stampede out the door will run them over. 50% of something is better than 100% of nothing...­..

[Yermammy]

"Other jurisdictions are more favorable, for more reasons than just taxation." I guess those "other jurisdictions" probably allow torture and child pornography also, since you can't have "free markets" unless their "truly" free, hunh... American companies, who owe their VERY EXISTENCE to American people buying their product and building their company are now slapped in the face and left holding the check and YOU'RE FINE WITH IT! (ie "Hey hey, why would I want to keep these crooks in country and compel them to pay taxes when I might be one of these tycoons one day (every stupid rethug's stupid impossible dream) and I WON'T WANT TO PAY TAXES EITHER!")
Ford Mo Co paid NINETY PERCENT tax during WWII, you know.... when they were slappin' together B-24 Liberators together and being PATRIOTS. Now, you run into the motel, have a quickie with the U.S. of A. and then you throw her a $20 dollar bill and say "see ya, wouldn't want to be ya!" You a patriot? Please...

[Hdaryl01]

Reality on reality's terms.....

I have not condoned, or disavowed the practice I describe above. I have merely attempted to explain and provide a little clarity to a very important (elephant in the living room-esque) issue that is conspicuously overlooked in the article which has had the predictable effect of throwing red meat to the reationary wolves that frequent the Huffington Post.

Circa World War II, the U.S. was the only game in town, Regardless of whether Ford wanted to stay and pay 90% tax as you say due to altruistic, social contract, or American nationalism reasons, there existed no other viable or practical alternative for Ford. India? China? South America? Russia? Asia? Europe in ruins? Virtually all sales back then for Ford, and all the other companies referenced above, were U.S. sales. And all other jurisdictions were in ruins, under developed, under infrastructured, and without money.

Such is not the case today. There are many other very viable and attractive alternatives for manufacture and domicile, and the vast majority of sales, and thus revenue, for a large universe of iconic American companies now comes from offshore sales.

It takes a few pieces of paper and a board meeting or two to effect a domicile change. The U.S. can revert back to 90% corporate taxation at will. How long do you think ANY fortune 500 or even fortune 1000 companies will remain domiciled it the U.S.?

The U.S. can't squeeze any harder....­...

[AnotherMcIntosh]

Obama is helping lobbyists weaken the law in this area?

By now, even the exceptionally slow should start to see a pattern.

[rosiebond007]

WHERE IS OUR FEARLESS LEADER ??????

[PATina]

You can't be serious??? hahahahaha­hahahahaha When they say truth is often more stranger than fiction... they didn't lie !!! Thanks David. I don't think anyone else is going to report this... hahahahahahahahaha

[TheBaffler]

Bush's third term is going quite swimmingly.

[thnk4selfagain]

I don't wonder why progressives acted in 2002. But I do wonder why I gave 2 months of my time/money to travel to 4 states to campaign for Barak Obama.

"The Obama administration is justifying its push on the grounds that the ban may - at some point in the undetermined future - conflict with our trade agreements. It's a charge North Dakota Sen. Byron Dorgan (D) rightly calls "absurd." Dorgan is right.

Add the hypocrisy of the Obama administration postponing (nixing it, really) going after corporations for their tax shelters while at the same time pursuing individuals for their shelters like those with UBS. The individual in all aspects of American life is unfairly carrying this country while the corporation get bailouts and free rides. That's corruption.

[Marcantm]

WHAT IS GOING ON!?!!

IS OBAMA IN CHARGE?

[ouroborous]

Sadly, yes.

(NB: I voted and campaigned for him. Can I have my money and time back?)

[Estreet1964]

They seem to be trying to sneak stuff like this into bills thinking that no one will notice.

A huge thank you to David and those intrepid, progressive journalists of your ilk for being diligent and taking notice.

Unfortunately, the past year has provided us with plenty of examples that this will be a corporate friendly White House.

Just what we needed for CHANGE.

[vippy]

I saw that from the start but I did not want to believe it. The energy bill and the credit card revision did it for me. Obama called it sweeping changes when in fact it did little for the people but everything for the banks and corporation. However, we cannot NOT vote for the DEMS in 2010 and 2012 and switch parties again for both are corrupt to the core and both parties got us into this mess. In fact it is about the only thing they all agree on when it comes to enriching themselves.

[AlaskanToo]

Well that's a fine how do you do. Great way to push away your base Mr. President.

[Master-T]

"You wonder, in short, whether you are getting sold down the river."

I don't think we really have to wonder anymore.