DeLauro Continues to Press for Ban on New Contracts with Corporate Expatriates

DeLauro Continues to Press for Ban on New Contracts with Corporate Expatriates

- Offers amendment to renew ban in Transportation-Treasury Approps Bill -

Congresswoman Rosa L. DeLauro (Conn.-3) today continued to press for a ban on contracts with corporate expatriates - companies that have incorporated on paper overseas in the tax haven countries of Bermuda, Barbados, the Cayman Islands, Antigua, Panama. DeLauro offered an amendment to the Fiscal Year 2007 Transportation-Treasury Appropriations Bill during floor consideration of the measure that would continue the ban on new contracts with companies that go offshore to avoid U.S. taxes. DeLauro worked with Senator Levin (D-Mich.) to include an identical ban on last year's Transportation-Treasury Appropriations Bill. The Department of Homeland Security is operating under a similar contracting ban.

"This amendment ensures that in the future, we will favor good corporate citizens with government contracts, instead of companies who put taxpaying American companies at a competitive disadvantage," said DeLauro. "Companies 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. This is a matter of patriotism, not profit."

Sixty-six percent of companies that hold government contracts but are incorporated in an overseas tax haven pay no federal taxes whatsoever. Companies who reincorporate overseas in order to reduce the amount of tax they owe to the U.S. Treasury cost the government an estimated $5 billion per year. Despite this lost tax revenue, DeLauro estimates that corporate expatriates will reap more than $15 billion in federal contracts in the coming years.

A June 2004 study by the General Accountability Office (GAO) determined that companies that engage in this form of tax avoidance often have an advantage in competing for federal contracts. As a result of this advantage, the GAO found that 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 cost of producing goods and services." In essence, DeLauro said, the American people may not be getting the best product possible because of this loophole.

The amendment would not affect existing contracts, only new contracts awarded by the agencies funded under this bill in fiscal year 2007.

http://www.house.gov/delauro/press/2006/June/corporate_expatriates_6_14_06.html