Taxes. Democratic presidential candidate Sen. Barack Obama of Illinois and Sen. John Kerry of Massachusetts, who ran four years ago, asked a Senate oversight panel today to investigate U.S. government contractors who set up shell companies in foreign jurisdictions to avoid taxes. In a letter to Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations Chairman Carl Levin, D-Mich., and ranking member Norm Coleman, R-Minn., Obama and Kerry wrote that companies like Kellogg, Brown & Root have set up shell companies offshore and hired workers through such subsidiaries to avoid U.S. payroll taxes. “We believe closing this glaring loophole is consistent with your efforts to address tax shelters and tax havens,” Obama and Kerry wrote. “There are numerous federal contractors that have subsidiaries located in tax havens and … an abundance of tax professionals willing to help companies shirk their tax responsibilities whenever a loophole can be found.” Obama and Kerry have introduced legislation to close such “loopholes,” and House Democratic Caucus Chairman Rahm Emanuel of Illinois and Rep. Brad Ellsworth, D-Ind., have introduced a similar bill in the House. That legislation, scored as raising $846 million over 10 years, was included in a larger tax bill the House approved last week. Obama and Kerry said they were working with the Senate Finance Committee, on which Kerry sits, to move the bill.
This article appears in the April 26, 2008, edition of National Journal Daily PM Update.