Chuck Grassley: “In a debate earlier today, the senior Senator from North Dakota responded to my challenge to point out a new corporate…”

“In a debate earlier today, the senior Senator from North Dakota responded to my challenge to point out a new corporate loophole closer that is not included in the tax relief reconciliation conference. The ranking Democratic member of the Budget Committee discussed a proposal developed by the Finance Committee Democratic staff that would repeal ``deferral'' for controlled foreign corporations doing business in tax haven countries. I share the senior Senator from North Dakota's concerns about the ability of large corporations to manipulate the Tax Code to shift large amounts of profits offshore. But this provision isn't the right way to address those concerns. It is both overbroad and inadequate. It is overbroad because it would harm the competitiveness of U.S. multinationals by repealing deferral for holding company structures that allow them to efficiently allocate active foreign-generated resources among their foreign operations without incurring U.S. tax on entirely foreign transactions. It is inadequate because it applies only to subsidiaries in black- listed countries. Companies that use tax havens for abusive purposes could easily avoid this rule by locating in a low-tax country that is not on the list, like Ireland, where we have read press reports that companies are shifting huge profits. Treasury would have authority to add countries to the list, but does anyone think Ireland, with whom we have a tax treaty, would be added to a black list?…”