The Obama administration wants to allow what business-friendly Republicans voted to end years ago—a free pass for American companies that avoid paying taxes by incorporating overseas, but still receive federal contracts. In 2002, Democratic lawmakers pulled off a surprising victory when they managed to convince enough GOP lawmakers to support a ban on contracts to any U.S. business engaging in tax “inversions.” These companies operate in the United States, but are incorporated overseas, allowing them to avoid paying the U.S. Treasury.

 

Now, some of these companies that got cut off from winning federal contracts are lobbying the Democrat-controlled Congress to weaken the ban. One is McDermott International, an engineering and construction company incorporated in Panama that focuses on oil and energy projects, and another is Accenture, a consulting, technology-services and outsourcing firm incorporated in Bermuda.

 

Administration officials argue that the ban may at some point in the future conflict with U.S. trade agreements, so it’s best to start removing it. Senator Byron Dorgan (D-ND), disagrees with the White House.

 

“The only reason you want to invert and get rid of your American citizenship is to avoid paying U.S. taxes,” Dorgan told The Hill. “We say: ‘You don’t want to pay U.S. taxes, you know what? You ought not get to do business with the federal government.’”

-Noel Brinkerhoff

 

Companies Using Offshore Tax Havens Look to Bill for Windfall (by Walter Alarkon, The Hill)

Obama Helping Lobbyists Weaken Offshore Tax Crackdown Dems Passed in 2002 Over GOP Opposition (by David Sirota, Open Left)