WASHINGTON - American corporations shouldn't be able to avoid paying U.S. taxes just because they buy a mailbox in another country, a senior member of the House Ways and Means Committee said Saturday.
In the Democrats' weekly radio address, Rep. Richard Neal (news, bio, voting record), D-Mass., attacked corporate expatriates that have relocated their headquarters offshore on paper only in order to claim they are not subject to U.S. taxes.
"This is bad for America and bad for our economy," he said.
One company whose jackhammers carved Mount Rushmore paid $28,000 to rent a mailbox in Bermuda in order to avoid a $40 million tax bill, he said. It later renounced its U.S. citizenship. He did not name the company.
When corporations do this, the federal tax burden they should have shouldered shifts onto individual taxpayers and working families, he said. Corporate expatriates will drain the federal Treasury of about $4 billion over the next decade, he estimated.
Neal, who is also a senior member of the House Budget Committee, said House Republicans slipped a provision in the energy bill to protect all of the corporate expatriates who have already left.
The bill pushed through by the House this week would protect the corporate expatriates who "cheat the American taxpayer and compete with American companies who stay," he said.
Meanwhile, he added, corporate expatriates are lining up for more than $2 billion in lucrative federal contracts with the U.S. government.
Tyco, formerly of New Hampshire, is now located in Bermuda. It avoids paying $400 million a year in taxes through its headquarters offshore, but was awarded $182 million in defense and homeland security contracts in one year, Neal said.
If Tyco had just paid its tax bill, Congress could have easily paid for 400 explosive detection systems which are needed to protect travelers at airports around the nation, he said.
"These are challenging times for all Americans, with war abroad and a struggling economy at home," Neal said. "The last thing the American taxpayer needs to hear is that while costs are going up, fewer will be paying in."