Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia and Independent Agencies Appropriations Act, 2007
TRANSPORTATION, TREASURY, HOUSING AND URBAN DEVELOPMENT, THE JUDICIARY, THE DISTRICT OF COLUMBIA AND INDEPENDENT AGENCIES APPROPRIATIONS ACT, 2007 -- (House of Representatives - June 14, 2006)
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Ms. DeLAURO. Mr. Chairman, I yield myself 2 minutes.
This amendment would simply continue current law by extending a provision that was accepted in conference last year. It would prevent the Departments and the agencies under this bill from using any funds to contract with American companies which have incorporated in Bermuda, Barbados, the Cayman Islands, Antigua, and Panama to reduce their tax obligation to the United States.
The Homeland Security Department operates under a similar ban. Recent data shows that despite costing our government $5 billion in lost tax revenue, corporate expatriates will reap more than $15 billion in Federal contracts in the coming years. Four of our top 100 Federal contractors have incorporated in tax-haven countries. One of them actually holds a contract with the IRS; the agency charged with collecting taxes is contracting with a company that is determined to avoid paying them.
Sixty-six percent of the companies that hold government contracts but are incorporated in an overseas tax haven pay no Federal taxes whatsoever. These companies have no business being rewarded by getting new business opportunities with the Federal Government.
The GAO has determined that these companies have an advantage when they compete for Federal contracts. It found that the contractors who are corporate expatriates can ``offer a price that wins a contract based more on tax considerations than on factors such as the quality and the cost of producing goods and services.'' In essence, the American people may not be getting the best product possible because of the loophole.
The amendment will not affect existing contracts, just as it did not this year. It simply ensures that in the future we will favor good corporate citizens with contracts instead of companies who put paying American companies at a competitive disadvantage.
Corporate expatriates have made a clear choice to leave this country to lower their taxes. It is up to us to say if they are going to manipulate the loopholes in our Tax Code, then they will no longer be able to reap the benefit of government contracts. In this amendment, we ask them to make a different choice.
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Ms. DeLAURO. Mr. Chairman, I think we ought to lay something out very clearly here. First of all, the notion that these are folks who are going to compete equally with other corporations that do not have the same tax advantage has been decried by the GAO, the Government Accountability Office. Let me repeat their commentary.
They found that contractors who go overseas for the ostensible purpose of reducing their tax obligation to the United States, and I quote, ``They can offer a price that wins a contract based more on tax considerations than on factors such as the quality and the cost of producing goods and services.'' They have a tax advantage because they do not pay what they are supposed to pay in taxes in the United States.
In fact, let me be very clear again. This amendment simply continues what current law is. It extends the provision that was accepted in conference last year. These companies have not suffered anything with regard to their bottom line. As a matter of fact, they are making profits hand over fist, and they are taking advantage of the tax loophole. Yes, they make that decision; but the decision is ours as to whether or not we allow them to come back and to compete for Federal contracts.
I do not have a preference for what they chose. Under the law, they can do what they want. But they should not be allowed to pretend to be an American company when it is time to get contracts but then claim to be an offshore company when the tax bill comes.
I also want to point out that this does not jeopardize and does not affect existing contracts, just as it did not this year. This is about the future.
I also want to make a point that the 2004 tax bill did not apply to companies who already have moved offshore. There are more than 25 such companies that currently operate with a tax advantage that their U.S. counterparts do not enjoy. So do not bring up the 2004 tax bill because it is not applicable.
Mr. Chairman, what we want to do is have companies be good corporate citizens. We are asking them to pay their fair share of taxes. That is what this is all about.
If we did more to discourage companies from setting up just post offices overseas to reduce their tax burden, we would have more funding available in this bill for other purposes. The notion that countries are going to retaliate, it is almost laughable. Barbados is going to retaliate against the United States, the Cayman Islands, Antigua, Bermuda? It is truly laughable that that would be a part of this debate.
Again, why do we want to encourage companies to go offshore to set up a post office box and not pay their fair share and their obligation in taxes to the United States?
So, I would just say to my colleagues, we have an opportunity here again, and people voted on this last year. I hope those who voted ``yes'' will continue to do so and that some will have a change of heart, understanding what the nature of this is all about. Let's have people, if they want to go offshore, that is our system. They can do that at the moment. We can take a look at closing tax loopholes at another opportunity. What they can't do is to come back and feed at the Federal trough and not pay their fair share of taxes like everyone else in this country is obligated to do.
Let's keep the loophole closed. Let's not reopen it at a time of record deficits when we can least afford to do it. This is a matter of patriotism and not profit. You want to do something for our friends and our troops overseas, close this loophole. Be a patriot and support this amendment.
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