Since the collapse of the U.S. economy in early 2009, U.S. President Barack Obama offers a plan, he said it would save American jobs: a blow enterprises, encourage enterprises to overseas profits tax loopholes to avoid paying billions of dollars in U.S. tax year .
Tax lobbying Ken Keyes is not worried. Ten years ago, he had led the fight to maintain a critical flaw - Treasury shorthand "tick" rule - when another Democratic President Bill Clinton, had tried to kill it.
"I tell my clients, do not sweat it, this is never going to happen," Keith recalled that he had informed the corporate giants Microsoft and GE (General Electric) on this issue.
Keith is correct.
Business groups rose up against Obama's plan, arguing that it could harm U.S. companies have threatened the weak economy. Democrats in Congress hesitation, Obama gave up this idea and survived vulnerabilities.
Story "tick" loophole that allows U.S. companies to choose for themselves how to classify its subsidiaries for tax purposes, is called "look through" the rule of a supporting policies, showing the Washington bureaucrats, lobbyists and politicians together - sometimes unintentionally - save money deprive American companies and the federal government taxes billion annually.
Began in 1996 as an effort by the Ministry to simplify the U.S. tax code mistaken for American businesses, grab it and never let go of a huge tax loopholes.
In addition to contributing to the profitability of an explosion, the U.S. company continues abroad - is now more than $ 1.8 trillion U.S. dollars, the Ministry of Commerce estimates that doubling the amount from less than a decade ago - has become a loophole how difficult it can be abolished tax incentives symbol once it becomes entrenched.
Last week at a Congressional hearing, some lawmakers blasted Apple's use "checked" loophole and other international tax strategies to avoid paying them is estimated at $ 90 billion U.S. dollars in 2012 in the United States of potential tax revenue.
Two of Apple's most aggressive questioner, Michigan and Arizona Republican Senator John McCain, Democratic Senator Carl Levin called Off "check" loophole. However, even if they have already voted to keep it alive, it has been inserted into other legislation several times in recent years.
Levin's office did not respond to requests for comment. McCain refused to comment on the matter.
, Said: "Once the policy mistakes is beneficial to taxpayers, especially for the taxpayer, it is extremely difficult to reverse, a former Treasury official who helped write" check box "rules and are involved in Obama's effort to repeal.
The official spoke on condition of anonymity, citing the sensitive nature of tax cuts.
"Check" loophole - cost the U.S. about $ 1 billion each, according to the White House - has also been reflected Washington's "revolving door" of cultural policy development and lobbying. Some bureaucrats who helped write the rules continue to work, use it to reduce their tax bill of the company.
They include William Morris, who was Deputy Treasury when the rule was sentenced to international tax lawyer.
Morris, who comment on this story did not respond to a request in 2000 to join GE, is now the company's global director of tax policy. Like many other large multinational companies, the company maintains its tax burden is much lower than the official U.S. corporate tax rate of 35% in part through the use of "selected" and other international tax planning strategies.
GE's annual report shows that the company do so, mainly because many are directed to its extensive network of overseas subsidiaries, its profits. February with the U.S. Securities and Exchange Commission in a document, GE said its overseas branches held $ 10.8 billion dollar offshore profits, which is more than any other American company.
Morris GE's tax policy the exact role is still unclear. The company declined to comment on the matter.
Other former IRS and Treasury officials to participate in shaping the tax loopholes, and now in Washington and New York law and accounting firms in senior positions.
The birth of vulnerability
Since its establishment in 1913, the tax code has been plagued by the U.S. government actually offshore tax havens.
1962 President John F. Kennedy and the Congress a compromise between "passive" income earned abroad, such as royalties and interest levied U.S. tax, but not "active" on a regular basis operating income.
The law, known as the F segment, increasingly complex tax laws become larger and more diverse enterprises. The law was amended 10 times between 1969 and 1996, the IRS trying to figure out how to classify, and then tens of thousands of legal tax unit.
1996 Ministry of Finance issues the simplified rules, so that enterprises "check box" to describe the form of taxes given legal entities - including whether, for tax purposes, irrelevant, so-called "entity does not exist."
For a company and its subsidiaries reported revenues of all subsidiaries of the parent company's revenue in the same form, allowing the U.S., rules to simplify tax returns.
However, when applied to U.S. multinationals, "ignoring the entity" status, can be used for high capacity or subsidiaries in Luxembourg, Ireland and other low tax jurisdictions established. Apple's a key part of the tax policy, for example, required in all of its revenue from Apple retail stores in Europe, Ireland, a subsidiary of the Company.
Treasury has little thought how to "select" the rules may affect multinational companies headquartered in the United States, according to several people involved in this work.
Treasury officials realized that they had created a huge loophole, they noticed a spike in cross-border financing shortly after the rules take effect.
"The mistake is to extend it to a foreign entity," Donald Lubick, the Ministry of Finance of the highest tax rates when officials told Reuters reporters. "It was obvious very quickly."
Clinton moved to the Ministry of Finance, revocation "check" rule in early 1998. However, Hallmark, Coca-Cola, IBM and other multinational Philip Morris launched a full-court press to persuade Congress to keep the rules.
Enter Kies, who is eager to put their expertise and liaison work as a tax lobbying Congress Joint Committee on Taxation, a former tax specialist.
Case's former Republican boss - Representative Bill Archer, Texas and Delaware Senator William Roth - accusing the IRS and the Treasury Department in an attempt to take away his authority beyond vulnerability.
Meanwhile, Keith said his pursuit of a strategy, he figured resonate with businesses, MPs and ordinary citizens, he believes that eliminating the "check" loophole would harm U.S. multinationals, forcing them to pay more taxes, not only in the United States, but also the high-tax countries such as France.
Ross Senate Finance Committee passed a bill in April 1998 the Ministry of Finance in order to prevent "check box to make any changes." Language is diluted when a non-binding resolution passed in the Senate measure, next month, But Congress message is clear: do not mess with loopholes.
Treasury soon abandoned its effort to withdraw.
"That was on Capitol Hill this rule, Concierge, our withdrawal notice," said Philip West, who was then in the Ministry of Finance tax officials recommend top international clients Steptoe international tax planning strategies.
"Check box" grow
By 2004, thanks in part to "check" rule, multinational companies headquartered in the United States in the $ 70 billion U.S. dollars of foreign exchange earnings to pay an effective tax rate of 2.3 percent, according to the Obama administration.
In order to make the "Check Box" tougher revoked, Case and other corporate lobbyists urged Congress to put the rules into law.
Congressional legislation in 2006, became known as the "look" rule to do so. Strengthening of the "tick" loophole to the enterprise more latitude to certain types of income from a foreign unit does not pay taxes.
Few debate through "rule" look becomes law, according to the U.S. Congressional Record. It was expanded into a vast additional tax cuts.
2006 law is not permanent, but supporters repeatedly by embedding in a large and important, but unrelated pieces of legislation passed by Congress, headed toward easy to extend it.
This happened in 2009, when Obama threatened to cut holes.
Congress has temporarily extended twice since then as a large part of the legislation. Levin and McCain voted in January to extend the legislation to make the U.S. government launched a "fiscal cliff" a comprehensive package of tax increases and spending cuts board, threatening to join the U.S. economy into another recession.
They also voted to extend it in 2010 as a part of broad tax bill.
Since 2009, Obama did not propose to repeal the loophole.
During the Senate hearing last week, Apple's tax strategies, Mark Mazur, the Treasury's assistant secretary of tax, said in written testimony, the Obama administration is still "concerned about the abuse of a variety of income transfer equipment, including abuse 'Check box "rules."
Mazur said the White House has put forward proposals to prevent the transfer of profits abroad. But it is unclear whether Obama will once again try to undo "tick" rule.
Obama's point of view, you can read the words of another president, who is also lower than his attack avoidance, of which overseas holding company fails to raise taxes.
"We are faced with a challenge to the government's authority to collect uniform and equitable, non-discriminatory, taxes president wrote:" According to the laws passed by Congress.
This letter was signed by the Franklin D. Roosevelt, and in June 1, 1937.
 
 



Other News:
Religious unrest in northeast Myanmar
How Treasury's tax loophole mistake saves companies billions each year
Assad says Syria received Russian missile shipment: Lebanese media
After smoothing tensions in Slovenia, PM Bratusek seeks to win over Europe
Congressmen find few Boston attack clues in Russia
Nikkei may test five-week low, hurt by sharp fall in U.S. stocks
Syria diplomacy a priority, despite EU arms vote
France to sell part of stake in Paris airports