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GWEN MOORE | Democratic member of Congress from Milwaukee madison.com | | Posted: Monday, April 23, 2012 5:00 am

Ugland House is a modest five-story office building in the Cayman Islands, yet it is the registered address for 18,857 companies. The Cayman Islands, like many other offshore tax havens, levies no income taxes on companies incorporated there. Simply by registering themselves in the Cayman Islands, companies can legally shift much of their U.S.-earned profit to the Caymans and pay no tax on it.

The vast majority of these companies have no physical presence in the Caymans other than a post office box at Ugland House. About half of these companies have their billing address in the U.S. This transparently false corporate presence is one of the hallmarks of a tax haven.

Abuse of tax havens by multinational companies and wealthy individuals is one of the most outrageous loopholes in the American tax system. These complex tax avoidance schemes allow many of Americas largest corporations to drastically shrink their tax bill. For example:

Google uses techniques nicknamed the double Irish and the Dutch sandwich, involving two Irish subsidiaries and one in Bermuda a tax haven that helped shrink its tax bill by $3.1 billion between 2008 and 2010.

Wells Fargo paid no federal income taxes for 2008, 2009 and 2010 despite being profitable all three years in part due to its use of 58 offshore tax haven subsidiaries.

G.E. received $3.3 billion in tax refunds in 2010 despite reporting over $5 billion in U.S. profits to shareholders. The company has $94 billion parked offshore and uses 14 tax haven subsidiaries.

These same corporations take advantage of and benefit from the many services and public structures provided by our tax dollars an education system that prepares their workforce, government-funded research which helps them remain competitive globally, a publicly funded infrastructure system to transport their products, and the protection that our military and court system provide. They are in effect parasites.

While this practice is not illegal, it could easily be stopped by Congress, except that these tax dodgers take their tax rebates and spend heavily on lobbying expenditures and campaign contributions. A recent report by WISPIRG and Citizens for Tax Justice found that 30 unusually aggressive tax dodging corporations have made campaign contributions to 524 (98 percent) sitting members of Congress, and disproportionately to the leadership of both parties and to key committee members, including the tax-writing Ways and Means Committee. Among Wisconsins delegation, House Budget Committee Chairman Paul Ryan, a Republican from Janesville who also sits on the Ways and Means Committee, received $144,750 and Ways and Means Committee member Ron Kind, a Democrat from La Crosse, received $109,500 from these 30 companies.

The pervasiveness of campaign money across party lines speaks volumes about why major proposals to close corporate tax loopholes have not even come up for a vote.

Excerpt from:
U.S. Rep. Gwen Moore: Ditch Cayman Islands tax loophole