[Congressional Record (Bound Edition), Volume 148 (2002), Part 8]
[House]
[Pages 10541-10542]
[From the U.S. Government Publishing Office, www.gpo.gov]




         NO TAX BREAKS FOR CORPORATIONS RENOUNCING AMERICA ACT

  The SPEAKER pro tempore. Pursuant to the order of the House of 
January 23, 2002, the gentleman from Texas (Mr. Doggett) is recognized 
during morning hour debates for 5 minutes.
  Mr. DOGGETT. Mr. Speaker, September 11 really brought out the best in 
Americans when all of us are continuing to be asked to sacrifice some 
for our country, and some have sacrificed their all. Unfortunately, 
certain of our multinational corporations are offering less, indeed, 
much less.
  Over the years, the United States has rightly entered into tax 
treaties with countries around the world to avoid taxing the same 
income twice for their businesses, as well as for ours. These treaties 
are so broadly worded, however, that some corporations can exploit them 
to evade taxes not just on their foreign earnings, but on what they 
earn right here at home.
  These corporations use gaps in the tax treaties to shift U.S. 
earnings abroad to countries like the Barbados or Luxembourg that 
impose little or no tax. This income vanishing act occurs through the 
creation of affiliated foreign shell corporations that make high-
interest loans or obtain hefty royalty fees from the American 
companies.
  To stop this abuse, today I am introducing the ``No Tax Breaks for 
Corporations Renouncing America Act.'' This abuse results from the 
broad way in which our tax treaties test foreign ownership and 
residency. Before globalization, one could assume that a company with 
stock listed on the stock exchange was a company from one of the 
countries with which it was listed, but that is no longer the case. My 
legislation, by narrowing the provision, ensures that tax treaties are 
used only for their intended beneficiaries, not for those corporations 
whose phony claim to foreign citizenship is based on little more than a 
new mailbox.
  By exploiting the tax treaty loophole, companies who renounce their 
U.S. citizenship are reaping a windfall. Corporate freeloaders are 
taking treaties designed to eliminate double taxation and are using 
them instead to eliminate all taxation on some of their income.
  These corporate ``ex-patriots'' are selective in waving the Star-
Spangled Banner. Yes, they want to be American to enjoy the protection 
of our Armed Forces, the protection and reliability of our courts, and 
to seek business from the Federal Government; but when it comes time to 
pay, to pay their fair share to keep America strong, Old Glory suddenly 
comes down the flagpole, and they claim they are foreigners.
  These fair-weather friends choose to wrap themselves in the flag when 
that is convenient, and renounce the flag and say they are foreigners 
and wrap themselves in a tax treaty when that is convenient; we have to 
put a stop to that. It is time to end the practice of them sending 
Uncle Sam a postcard that says, ``Sorry, you can find me in Barbados, 
glad you are not here.''
  American executives who want to evade U.S. taxes on U.S. income by 
moving their mailbox to an island and hold beachside board meetings, 
are entitled to a tan, not a tax break.
  Take companies like Cooper Industries and Stanley Tools. They make 
tools, shovels, and the like; but we might think that when Stanley says 
it is making something great, it had in mind beach tools like this from 
its new residency. The way that they are operating inspired one of my 
neighbors down in Austin to note that Stanley Works ought to be called 
``Stanley Flees,'' because it has fled Old Glory and America.
  A vote for the bill that I am introducing today will send the 
executives a message: They can play all they want on the beach to avoid 
taxes, but Congress will not put its head in the sand. They can have 
fun in the sun, but Congress refuses to let the rest of us, Americans 
who are working hard to pay our taxes, get burned by having to pay 
their taxes also. It is the American taxpayer who gets hammered when 
Stanley Works or one of these other companies heads off to foreign 
shores and does not pay its fair share for our increased national 
security needs.
  And remember, allowing a few unpatriotic corporations to exploit this 
loophole gives them a competitive advantage over the many American 
corporations that stay and pay their fair share and are competitors 
with those who leave our shores.

                              {time}  1045

  Freedom is not free. Corporate free loaders, Uncle Sam wants you, 
wants you to pay your fair share to support America.
  I encourage my colleagues to join with me in supporting the ``No Tax

[[Page 10542]]

Breaks for Corporations Renounces America,'' act so we can ensure 
equity and fairness in our tax system and put an end to those who are 
abandoning us through reliance on provisions in these tax treaties that 
were never intended for the purpose for which they are now being 
exploited.

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