Carl Levin

You have gone into what CSARL has done, and I am----

Thank you all for being with us today. Thank you for your cooperation with this Subcommittee.

PMs [Product managers] in US will put some pressure on the parts profit model.

And if the transaction is designed for the purpose of lowering taxes, that is a relevant fact to the judge?

I think it is Exhibit 13.1A. Is that correct?

Thank you, Senator Johnson.

But that is one relevant fact.

Profits attributable to U.S.-created intangibles should not end up in a jurisdiction without substance.

Caterpillar is an American success story that produces iconic industrial machines. But it is also a member of the corporate profit-shifting club that has transferred billions of dollars offshore to avoid paying U.S. taxes.

Now, Caterpillar, in its written statement submitted to the Subcommittee, says that even if it were stipulated that the changes made in 1999 were motivated primarily by tax considerations and generated primarily tax effects, the economic…

We codified the economic substance doctrine in 2010 and we stated that the IRS can invalidate transactions that create no meaningful change in the economic position of the taxpayer and have no 'substantial purpose other than to achieve a…

Is it fair to call that 'profit shifting'?

Tax avoidance through the use of dubious tax loopholes costs the treasury tens of billions of dollars each year, making it harder for us to invest in the education, innovation, and infrastructure that promote our prosperity.

So from the beginning, the decision to use CSARL and direct Caterpillar's non-U.S. profits to Switzerland was to shift profits to a low-tax jurisdiction.

You have seen it. But you just never heard it described as a virtual one?

But you said, ``. . . say they decide most PMs [part managers] stay in US [the United States],'' not ``move to the United States,'' ``stay in US.''

And this was the marketing company for Latin America, Canada, and the Caribbean?

That is correct, to 'Remove . . . from the chain of title . . . for purchased . . . parts.'

Is it not true that PwC had an ongoing program called Global Tax Optimization Program (GTOP), to reduce corporate taxes? Is that true?

Now, at the same time, Pricewaterhouse performs two functions; in other words, it is Caterpillar's independent auditor, but it is also its tax consultant.

Thank you, Mr. Chairman.

And would any reasonable business have entered into the type of exchange that occurred here?

The Subcommittee for many years has investigated how some of our most profitable corporations exploit loopholes in the U.S. tax code to shift income and profits to offshore tax havens, thereby denying tax revenue to Uncle Sam.

That it should not pretend that it is in Switzerland.

Thank you, Senator McCain.