Posted on 05/06/2002 4:19:43 AM PDT by Liz
WASHINGTON, May 5 — Trying to burnish their credentials as the champions of underdogs and the scourge of the privileged, Democrats in Congress and around the country are promoting legislation that would prevent American companies from avoiding taxes by reincorporating in offshore tax havens.
The legislation is driven by public anger over the collapse of the Enron Corporation, which escaped millions of dollars in taxes by creating subsidiaries in countries that are tax havens, and has gained so much momentum that it stands a chance of becoming law this year, despite the opposition of Republican leaders in the House of Representatives and the lack of enthusiasm in the Bush administration.
Nowhere is the political force behind the legislation clearer than in Connecticut, where because of reapportionment, Representatives Jim Maloney, a Democrat, and Nancy L. Johnson, a Republican, have been forced to run against each other for re-election.
The issue is especially pertinent in the new district because Stanley Works, which makes hammers and other hand tools and has been based in New Britain, Conn., for more than 150 years, is planning to reincorporate in Bermuda, which has no income tax. Stockholders will vote on the move on Thursday.
Many other companies have created nominal headquarters in Bermuda in recent years or are planning to do so. Mr. Maloney and Mrs. Johnson are among the sponsors of legislation that would lift the tax advantages these companies enjoy.
Mr. Maloney has been the more outspoken of the two. He calls the move by Stanley Works, which has not had a factory in Connecticut for years, "deeply unpatriotic and deeply damaging to the state of Connecticut and to our country."
He has also used the issue to attack Mrs. Johnson, who is a senior member of the Ways and Means Committee, where tax legislation must originate and where the Republican leadership is opposed to the tax haven bill.
He put his argument this way in a recent interview: "She touts her seniority on the Ways and Means Committee and her ability to get things done. I'll be interested in seeing if she can use her position to advance this bill. If she doesn't, that will indeed be a part of the discussion in the campaign."
Asked to respond, Mrs. Johnson said she had supported legislation against tax havens for years when Mr. Maloney had nothing to say about the question. One reason those bills went nowhere, she said, was the lack of support from the Clinton administration. "What he's doing is politics," Mrs. Johnson said. "What I'm doing is policy."
The issue has cropped up in other races across the country. In California, for instance, Bill Simon Jr., the Republican candidate for governor, has been criticized for founding a company in the 1990's that set up a tax shelter in the Cayman Islands.
"The issue allows you to go after Republicans on tax cuts without having to be against all tax cuts," said Tom King, a Democratic consultant who is involved in several Congressional races. "This is an example of a bad tax cut."
Republicans said they were not concerned. "This is just another example of Democrats struggling to find any issue that will stick," said Carl Forti, the spokesman for the National Republican Congressional Committee.
But Geoffrey Garin, a Democratic pollster who recently surveyed 1,001 likely voters in the 33 most competitive Congressional districts to determine what issues they felt most strongly about, said tax shelters were among the matters that upset voters most.
The situation in Congress is beginning to gel. In the Senate, Senator Max Baucus of Montana and Senator Charles E. Grassley of Iowa, the chairman and top Republican, respectively, on the Finance Committee, plan to move a bill through the panel this month that would prevent companies that reincorporate in tax havens from escaping United States taxes if they had no substantial business in the place of reincorporation.
Normally, when a tax measure has the strong support of the chairman of the Finance Committee and the top senator from the minority, it gets clear sailing through the Senate.
In the House, Representative Bill Thomas, the California Republican who is chairman of the Ways and Means Committee, holds that the use of tax havens is a symptom of problems with the corporate tax code generally, not one that should be addressed absent an overhaul of the entire code.
As a rule, legislation does not come out of the Ways and Means Committee without the chairman's imprimatur. But if the Senate approves a tax haven bill soon, Mr. Thomas, a California Republican, could have his hand forced by election-year politics.
Already, Representative Jim McCrery, Republican of Louisiana, has announced that a Ways and Means subcommittee he leads will hold a hearing on offshore tax shelters next month. Another Republican member of the committee, Representative Scott McInnis of Colorado, has introduced his own bill to end tax havens.
All the Democrats on the committee favor a measure that would prevent companies from taking advantage of these havens. The chief sponsor of the House legislation, Representative Richard E. Neal, Democrat of Massachusetts, said, "If we can get this bill on the House floor, I promise you, it will get 300 votes." The House has 435 members.
At the Senate hearing in March, Mark Weinberger, then chief of tax policy at the Treasury Department, was cool to the idea of a specific law against tax shelters. He left office last month and has not yet been replaced. The administration's view seems to have shifted somewhat since March.
A Treasury spokeswoman, Tara Bradshaw, said the position now is that tax havens are "an important issue" that the Treasury is studying. "We will be working with Congress and the I.R.S. to develop and implement an appropriate course of action as quickly as possible," Ms. Bradshaw said.
REPUBLICAN DILEMMA Enron was lacerated for its bad boys' offshore wrongdoing but if DumboRats are on the side of eliminating offshore tax shelters, should Pubbies be against it?
What is "unAmerican" is the way the democrats and the republicans interpret the laws concerning taxation. Right now, anyone working for the government (servicemen excluded) believes that all our tax dollars belong to them because "they collected it." Ask any government worker. They will tell you the same thing. Never mind the working man who pays the taxes, or the business who hires him, and is penalized via taxation for employing him. Add the legal atmosphere (attorneys suing for "asbestos", fast track "free" trade legislation, etc.), and you find that America's businesses have very little protection.
When an American business looks to a foreign land for some relief, that means the business is looking protect its existance. If this means that a 160 year old company has to incorporate in a foreign land in order to employ American workers and protect its assets and shareholders, so be it.
Agree, and Bill and Hill would be hurt as well, the entire family as well and all their friends.
OTOH, would not want any surprises here. But Repubs need to be in the habit of taking a stand and not falling over to the slightest of political winds blown by Dems.
They could find an alternative argument. . .like if we take away offshore corporate homes; then perhaps we should disallow foreign investment/ownership in our country; much of what stems from the same desire to escape other countries prohibitive tax structures. . .I think. . .
A 'house of cards' argument, so to speak. . .and if that argument is not correct; Repubs should be able to find one. . .
Rich people dont put their money in a safe and stash it. They reinvest it and put it to work for them to make more money.
It seems abundantly clear that gov.org is intent on destroying america. I think the people who have been votescamed into office are only interested in filling their own bank accounts. The vast majority would not cut it in the corporate world.
America needs tax freedom from wages, personal and corporate.We also need term limits on the amount of time parasites can serve in gov.org.
Good point. Most of their wealth emanates offshore as well.
They feather their own nests and the people be damned. Term limits was tried but eventually
failed........the pols'll be there as long as they can sucker gullible people into voting for them.
Also used in outhouses when they run outta Sears catalogues.
McAwful is the one who taught the conniving Klintoons about offshores.
Of course the NY Slimes will never investigate how the big Rats use off shore Tax Havens regularily.
Isn't one of Da$$holes biggest political donors, an off shore bank/tax haven?
LL, there are so many big time Rats who use and have used off shore tax havens, it makes me wonder if the Slimes editors are inhaling too much and that STD's have wrecked most of their brain cells.
Do these STD brain damaged editors really think that they can get by with a one sided tale on this issue?
"You believe in principle. I believe in politics."
Watta shame. Poor birds...... exposed to that kinda stench.
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