We all know that billions and billions of our taxes are going to help rebuild Iraq, but do you know your hard work is helping to rebuild Europe's infrastructure as well?
According to this story from Reuters, it's true!
U.S. Tax Shelters Benefiting Europeans, Others
By Donna Smith
WASHINGTON (Reuters) - American taxpayers are subsidizing bridges, subway systems and other infrastructure in Europe and elsewhere through corporate tax shelters that cost the U.S. Treasury billions of dollars, industry experts told a Senate panel on Tuesday.
Testifying before the Senate Finance Committee from behind a screen, a former leasing industry executive described complex transactions that involve companies paying lump sums to foreign towns and cities to lease bridges, dams, subways and other infrastructure.
They then lease the property back to the town or city for the sole purpose of cutting their U.S. tax bill by depreciating the asset. No lease payments are ever made and the town or city is in no danger of losing control of the subway or other asset, he explained.
"The only risk in the overall transaction is whether the IRS will attack the depreciation deductions of the U.S. investors," he said.
With his voice distorted, the former leasing industry executive described by the committee only as "Mr. Janet," said the transactions are arranged by some of the biggest financial advisors in Europe and the United States.
Participants include major U.S. banks and Fortune 500 companies, he said.
"This scheme is so pervasive that much of the old and new infrastructure throughout Europe has been leased to, and leased back from, American corporations," he said.
He told the panel that the tax shelter scheme has been so successful that U.S. cities are now doing the same, with the subway systems of Boston, Chicago and Washington having been leased back to U.S. corporations. He said he had reason to believe that New York and Chicago water authorities were about to lease the waterlines under their streets.
Other witnesses described how their careers were destroyed by blowing the whistle on questionable tax shelter schemes.
"A culture existed in which intimidation and coercion were often used to foster the abusive tax shelter environment," Mike Hamersley said about his experience at accounting giant KPMG.
Hamersley said he was still on the company's payroll but was no longer allowed into its offices.
Tax professionals who "played the game" and promoted abusive tax shelters were rewarded, he said. Those who raised concerns were "reprimanded and their opportunities for advancement were limited."
Senate Finance Committee Chairman Charles Grassley is pushing to clamp down on abusive tax shelters. A measure inserted into a business tax bill the committee passed earlier this month would discourage firms from engaging in transactions that have no business purpose other than to avoid taxes.
"I say to the hucksters (of abusive tax shelters) it is time to find an honest living," said Grassley, an Iowa Republican.
Sen. Max Baucus of Montana, the top Democrat on the committee, said abusive tax shelters cost the federal treasury about $14 billion to $18 billion a year.
"This has got to stop, plain and simple," he said.
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Work hard folks, both Iraq and Europe are depending on you!
According to this story from Reuters, it's true!
U.S. Tax Shelters Benefiting Europeans, Others
By Donna Smith
WASHINGTON (Reuters) - American taxpayers are subsidizing bridges, subway systems and other infrastructure in Europe and elsewhere through corporate tax shelters that cost the U.S. Treasury billions of dollars, industry experts told a Senate panel on Tuesday.
Testifying before the Senate Finance Committee from behind a screen, a former leasing industry executive described complex transactions that involve companies paying lump sums to foreign towns and cities to lease bridges, dams, subways and other infrastructure.
They then lease the property back to the town or city for the sole purpose of cutting their U.S. tax bill by depreciating the asset. No lease payments are ever made and the town or city is in no danger of losing control of the subway or other asset, he explained.
"The only risk in the overall transaction is whether the IRS will attack the depreciation deductions of the U.S. investors," he said.
With his voice distorted, the former leasing industry executive described by the committee only as "Mr. Janet," said the transactions are arranged by some of the biggest financial advisors in Europe and the United States.
Participants include major U.S. banks and Fortune 500 companies, he said.
"This scheme is so pervasive that much of the old and new infrastructure throughout Europe has been leased to, and leased back from, American corporations," he said.
He told the panel that the tax shelter scheme has been so successful that U.S. cities are now doing the same, with the subway systems of Boston, Chicago and Washington having been leased back to U.S. corporations. He said he had reason to believe that New York and Chicago water authorities were about to lease the waterlines under their streets.
Other witnesses described how their careers were destroyed by blowing the whistle on questionable tax shelter schemes.
"A culture existed in which intimidation and coercion were often used to foster the abusive tax shelter environment," Mike Hamersley said about his experience at accounting giant KPMG.
Hamersley said he was still on the company's payroll but was no longer allowed into its offices.
Tax professionals who "played the game" and promoted abusive tax shelters were rewarded, he said. Those who raised concerns were "reprimanded and their opportunities for advancement were limited."
Senate Finance Committee Chairman Charles Grassley is pushing to clamp down on abusive tax shelters. A measure inserted into a business tax bill the committee passed earlier this month would discourage firms from engaging in transactions that have no business purpose other than to avoid taxes.
"I say to the hucksters (of abusive tax shelters) it is time to find an honest living," said Grassley, an Iowa Republican.
Sen. Max Baucus of Montana, the top Democrat on the committee, said abusive tax shelters cost the federal treasury about $14 billion to $18 billion a year.
"This has got to stop, plain and simple," he said.
******
Work hard folks, both Iraq and Europe are depending on you!
