[Congressional Record Volume 148, Number 66 (Tuesday, May 21, 2002)]
[House]
[Pages H2663-H2664]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 CORPORATIONS MAKING FAKE MOVES OFFSHORE TO AVOID TAXES AKIN TO TREASON

  Mr. DeFAZIO. Mr. Speaker, today the United States House of 
Representatives will take up legislation to accelerate and phase in 
relief from the marriage penalty. This is meritorious legislation, 
which I intend to support. The House was supposed to take up this 
legislation last Thursday. Strangely enough, it was postponed until 
today. The reason it was postponed until today was so it could be 
brought up under an extraordinary procedure which does not allow 
amendments because the Republican leadership feared the Democratic 
amendment to that bill.
  Mr. Speaker, we wanted to close a huge new corporate loophole which 
has been discovered by people who make Arthur Andersen and Enron look 
kind of honest. Major U.S. corporations have found, and they have known 
for years, that they can go to Bermuda and avoid taxes on their 
overseas earnings. Now they have found if they do a new Bermuda 
triangle, they can avoid all taxes in the United States of America 
while living here, being protected by our military and firefighters and 
police, but not pay one penny in Federal income taxes. This is a great 
country.
  This, of course, has the support of the administration, quietly. They 
are quick to accuse people of being unpatriotic, and God forbid they 
accuse corporations of being unpatriotic for failing to contribute 
their fair share and going under a flag of convenience and making a 
phony move offshore to avoid paying taxes in this time of crisis. This 
is extraordinary to me.
  Mr. Krugman explained it very well in the New York City Times. ``By 
incorporating itself in Bermuda, a U.S.-based corporation can, without 
moving its headquarters or anything else, shelter its overseas profits 
from taxation. Better yet, the company can then establish `legal 
residence' in a low-tax jurisdiction like Barbados, and arrange things 
so that its U.S. operations are mysteriously unprofitable, while the 
mail drop in Barbados earns money hand over fist.'' And, it is exempt 
from any tax anywhere in the world. That is just great.
  That is what Secretary O'Neill calls competition. I call it tax 
evasion, skulduggery, and unpatriotic; and the Republican leadership 
should be ashamed that they are not willing to vote about keeping this 
loophole open. If that is what they feel, allow us to offer our 
amendment and vote in favor of this tax loophole. Admit that they have 
thrown in with Secretary O'Neill who says corporations should not pay 
any taxes in the United States of America.
  Yes, that is true. The Secretary of the Treasury, appointed by George 
Bush, says that corporations should pay no taxes in this country, that 
working people should pay all of the taxes, a shift that has been going 
on over 30 years, where 30 years ago corporations paid one-quarter of 
the taxes in this country. Today it is down to a little less than 10 
percent. He says that is too much. The American people should carry 
that burden, not corporations.
  People say they have stockholders and they will do well. Under this 
new scam with Stanley Works, the company that is most known for this 
recently, actually the stockholders are going to have to pay taxes when 
the company makes its fake move to Barbados, but the CEO is going to 
get 58 percent of the tax savings. So over 8 years, the CEO could 
potentially profit by $385 million with his stock options, one 
individual, while the stockholders pay more in taxes, while the U.S. 
Government was deprived of $240 million in taxes. If they had just cut 
his stock options and salaries down to $140 million, they could have 
paid their taxes to the United States of America. Of course, he would 
have had to scrimp by on $140 million over the next 8 years. Pretty 
tough to make ends meet in Connecticut on $140 million over 8 years. I 
know the cost of living is way up.
  This is just an absolute new low both for this body, this 
administration, and such an unbelievable fraud on the American people. 
This practice must be brought to a screeching halt. In a time of 
deficit and crisis, for a profitable U.S. corporation to make fake

[[Page H2664]]

moves overseas to avoid their patriotic obligation to pay taxes is, I 
believe, akin to treason.

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