Bill aims at firms moving offshore as tax ploy

Thursday, Feb. 13, 2003 | 9:35 a.m.

WASHINGTON -- Sens. Harry Reid, D-Nev., and Carl Levin, D-Mich., on Wednesday introduced the Corporate Patriot Enforcement Act, which targets U.S. companies that set up offshore shell headquarters to avoid paying federal taxes. Companies use the ploy to save $4 billion in U.S. taxes a year, Reid said.

The bill takes aim at about two dozen companies that recently moved, and others considering moves, that are using shell headquarters to take advantage of tax loopholes. The bill outlines criteria for identifying such firms and subjects them to U.S. taxes as if their headquarters were still in the United States.

Reid cited the example of heavy manufacturing company Ingersoll-Rand, which left New Jersey for an office in Bermuda in 2001. The company is unfairly ducking about $40 million in U.S. taxes, Reid said. The company has U.S. government contracts -- some of the company's equipment is even being used for construction of a new visitors center at the U.S. Capitol.

"These corporations want the benefits of American citizenship, while other people shoulder the tax burden," Reid said. "Corporations depend on our transportation system, our legal system, and our education system. These things cost money -- money that comes from the taxes Nevadans and other Americans pay."