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Public Statements

Statements on Introduced Bills and Joint Resolutions

By:
Date:
Location: Washington, DC


STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - July 29, 2005)

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Mr. OBAMA. Mr. President, I rise today to speak about the ``Tax Shelter and Tax Haven Reform Act of 2005,'' of which I am a cosponsor. This bill seeks to improve the fairness of our tax system by deterring the use of tax avoidance strategies with no economic justification other than to reduce tax liability and shirk responsibility.

Abusive tax shelters and tax havens cost this country tens of billions of dollars each year and may be the largest single source of the $300 billion tax gap between what is owed and what is collected by the U.S. Treasury. The investigation by my colleagues on the Senate Permanent Subcommittee on Investigations found that more than half of all federal contractors may have subsidiaries in tax havens and that almost half of all foreign profits of U.S. corporations in a recent year were in tax havens. My esteemed colleagues also heard testimony that between 1-2 million individual taxpayers may be hiding funds in offshore tax havens. Many of these tax havens refuse to cooperate with U.S. tax enforcement officials.

This is not a political issue of how low or high taxes ought to be. This is a basic issue of fairness and integrity. Corporate and individual taxpayers alike must have confidence that those who disregard the law will be identified and adequately punished. Those who enforce the law need the tools and resources to do so. We cannot reasonably expect an American business to subject itself to a competitive disadvantage by following the law while watching its competitors defy the law without repercussion.

This bill cracks down on those individuals and businesses that establish virtual residences in tax havens abroad while taking unfair advantage of the very real advantages of actual residence here in the United States.

This bill clarifies that the sole purpose of a transaction cannot legitimately be to evade tax liability.

This bill increases the penalties for those who profit by manipulating and exploiting our tax laws, resulting in higher rates and greater complexity for the rest of us.

My mother taught me that there is no such thing as a free lunch--someone always has to pay. And when one of us shirks our duty to pay, the burden gets shifted to others, in this case to ordinary taxpayers and working Americans without access to sophisticated tax preparers or corporate loopholes.

This bill strengthens our ability to stop shifting the tax burden to working families. The money saved by this bill, for example, can reduce the burden on American children of unnecessary budget deficits being financed by rising debt to foreign nations.

The money saved by this bill can also be used to protect children in low income families from unfair tax increases caused by inequities in the child tax credit. In fact, this fall, I intend to introduce legislation to ensure that the child tax credit is not reduced solely because a family's income fails to keep pace with inflation. With less than half of the savings generated by this bill, we can shield more than four million children from the annual tax increase their families face as a result of stagnant wages and inflation under current law.

All of us should pay our fair share of American taxes. There is no excuse for benefiting from the laws and services, institutions and economic structure of our nation while evading your responsibility to do your part for this country. I believe it is our job to keep the system fair, and that's what this bill seeks to do.

I commend Senator LEVIN and Senator COLEMAN for their leadership on this important issue. I am proud to be a cosponsor of this bill and urge my colleagues to support it.

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