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Tax-avoiding companies shouldn’t get contracts paid for with your tax dollars


_V-Levin

By Sen. Carl Levin

Over the last few months, there has been a growing rush of U.S. corporations seeking to swear off their U.S. citizenship and move their mailboxes, for tax purposes, to a low-tax jurisdiction. I don’t think that’s right, and it’s time we put a stop to it. Three months ago, I introduced the Stop Corporate Inversions Act with 22 co-sponsors, which would do just that.

A few weeks ago, Sen. Richard Durbin of Illinois, Sen. Jack Reed of Rhode Island, and I introduced another bill, the No Federal Contracts for Corporate Deserters Act. This new legislation would at least ensure that companies that shift overseas and renounce their U.S. citizenship to avoid taxes don’t get taxpayer-funded federal contracts.

Most Americans agree with us that taxpayer dollars shouldn’t be used for contracts with companies that move their addresses abroad to dodge U.S. laws. Over the last 12 years, Congress has passed a series of restrictions on federal contracting with inverted corporations. We passed restrictions in 2002, 2006 and 2007. Since fiscal year 2008, a government-wide provision banning contracts with inverted corporations has been included in every annual appropriations bill.

The No Federal Contracts for Corporate Deserters Act would strengthen that ban by closing a number of loopholes in the current law. Those loopholes have allowed some inverted corporations to continue collecting revenue from American taxpayers while at the same time shifting their tax burden onto those same American taxpayers. Our bill also makes the existing ban, which has been included in annual appropriations bills, permanent.

Some may say that the real reason for inversions is that our tax rate is too high. It’s true the top corporate rate is 35 percent. But the effective tax rate—what corporations really pay—is about 12 percent. And when companies can go to places like Ireland or the Caribbean and negotiate sweetheart deals to pay little or no taxes, there will always be tax incentives for companies to abandon their country instead of paying their tax bill, no matter what our tax rate is.

Some may say that we should wait for tax reform to address this issue. There are two reasons why we shouldn’t. First, if it happens at all, tax reform is months or years away; these inversions are happening now. Second, this is a bill about contracting.

This bill doesn’t amend the tax code. And it has been referred to the Homeland Security and Governmental Affairs Committee, which oversees federal contracting, and not to the Finance Committee, which oversees tax policy. So even senators who think we should wait until we pass comprehensive tax reform before fixing the tax inversions problem should be able to support this bill.

In similar circumstances in the past, Congress has chosen to act overwhelmingly and in a bipartisan fashion. This should not be a partisan issue. This is about fairness. It is simply unfair to businesses that don’t invert to have to compete with companies that do invert.

This is about putting American families who work hard and pay their share. We shouldn’t sacrifice the interests of those families. We shouldn’t ask them to send their hard-earned tax dollars to contractors who skip out on their tax obligations. I look forward to working with my colleagues to move this legislation forward.

Carl Levin is the senior U.S. senator from Michigan.

 

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A Year of Focused Commitment


_V-LevinBy Sen. Carl Levin

When I announced last March that I would not seek reelection in 2014, I said that I wanted to spend my time working on a number of serious challenges that Michigan and the nation face, rather than on reelection. As we begin the new year, I want to update you on the tests we faced in 2013 and where I believe we can move forward in the year ahead.

Among the tasks I mentioned in my announcement was my responsibility as chairman of the Senate Armed Services Committee to monitor and advance the end of our combat commitment to Afghanistan and to help the services, our troops and their families recover from the strains of more than a decade at war.

In two trips to Afghanistan over the last year, I have seen rapid and positive changes that are transforming security and daily life for the people of Afghanistan. Challenges remain, but our troops and our nation should feel a sense of accomplishment about what we have done there for our national security and for the people of Afghanistan.

In Syria, where severe repression has sparked a revolt against the dictator Bashar Assad, the use of chemical weapons by Assad’s forces against civilians shocked the world. With a strong U.S. push, international pressure pushed Assad into an unprecedented agreement to destroy Syria’s chemical weapons capability. That agreement is an advance for the security of the region and the world.

Pressure on another outlier country—Iran—has for the first time in decades provided at least some hope of progress. Late in the year, the United States and our allies reached an interim agreement that freezes Iran’s nuclear program and could set the stage for a final agreement that ends the possibility of an Iranian nuclear weapon. Like most Americans, I am skeptical of Iran’s leaders, but I believe this interim step should be given a chance to succeed.

As our involvement in Afghanistan recedes, we have an opportunity and a responsibility to give greater attention to tired military families and help the services rebuild military readiness that has been strained by war. But that opportunity will slip away if we do not address the continuing threat of budget sequestration.

Sequestration is the across-the-board, automatic spending cuts that slashed major funding from important domestic and national security programs in 2013. These cuts have closed Head Start classrooms; ended research programs to fight life-threatening diseases; and forced our military to ground fighter jets and cancel important training exercises. The budget agreement we reached at the end of 2013 reduces sequestration’s impact somewhat for the next two years and offers a bit of hope for an end to the cycle of crisis that has plagued Congress. But it does not touch sequestration for the following six years.

In the longer term, there is only one solution to the sequestration problem: We should replace these meat-ax cuts with a balanced deficit reduction plan. Any such plan must include additional revenue. I have introduced two bills that would close unjustified tax loopholes identified by the Permanent Subcommittee on Investigations, which I chair. These loopholes are the source of massive tax avoidance by highly profitable multinational corporations and wealthy individuals at the expense of middle-income families. I will continue searching for common ground with colleagues of both parties to work for a balanced replacement for sequestration.

We’ve made significant progress in recent years in building on Michigan’s manufacturing and technological excellence to enhance our state’s competitiveness and improve opportunities for Michigan workers. The growing strength of our auto industry as it emerges from its restructuring is just one result of these efforts. Michigan is an increasingly important hub for development of green-energy technologies in vehicles and other fields. The Facility for Rare Isotope Beams, a groundbreaking nuclear research facility being established at Michigan State University, reached important milestones. I’ll keep working in the year ahead to strengthen our foundation of economic competitiveness.

The last year was a difficult one for our state’s largest city, Detroit. I and other members of the Michigan delegation have worked to do all we could to make sure that the city has access to all available federal resources to assist in its recovery, and I’ll continue to look for ways to help.

There is no question this year will be a challenging one. My final year in the Senate will be one of focused commitment to the job I was sent here to do.

Carl Levin is the senior U.S. senator from Michigan.

 

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