Rep. Brad Sherman, Christine Jennings Discuss Need for Offshore Tax Reform
“Must make sure that taxes can’t be evaded by taking money out of the country”
SARASOTA, FL – September 23, 2008 – Visiting Sarasota this weekend to support the candidacy of Christine Jennings, Rep. Brad Sherman (D-CA), one of Congress’ foremost experts on taxes, discussed steps that can be taken to restore fiscal responsibility in Washington, including closing certain offshore tax loopholes.
“We must do what it takes to ensure that honest, tax-paying Americans are not undercut by loopholes that allow the super-rich to avoid paying their fair share of taxes,” said Christine Jennings, Democratic candidate for Florida’s 13th Congressional District. “There are steps we should be taking to curb these loopholes and make sure that taxes can’t be evaded just by taking money out of the country.”
Representing California’s 27th Congressional District since 1997, Rep. Sherman currently serves on the Committee on Financial Services, the Judiciary Committee and the Committee on Foreign Affairs, and is the chairman of the Subcommittee on Terrorism, Nonproliferation and Trade. Rep. Sherman, who specialized in tax law as an attorney and is a Certified Public Accountant, also was an instructor for Harvard Law School’s International Tax Program.
Specifically, Rep. Sherman pointed out two bills that show promise in combating offshore tax loopholes:
* H.R. 2136, the Stop Tax Haven Abuse Act, sponsored by Rep. Lloyd Doggett (D-TX), which would “restrict the use of offshore tax havens and abusive tax shelters to inappropriately avoid federal taxation.”
* H.R. 2345, the Abuse of Tax Shelter Shutdown and Taxpayer Accountability Act of 2007, also sponsored by Rep. Doggett, would “curb tax abuses by disallowing tax benefits claimed to arise from transactions without substantial economic substance,” including provisions to define “economic substance” and increase penalties for large corporations and individuals with high net worth who fail to disclose certain tax-sheltered transactions.
Jennings’ opponent, Rep. Vern Buchanan, has exploited offshore tax loopholes for his own personal wealth in a few different ways. He and his immediate family members own offshore reinsurance companies that allow his car dealerships to pay much reduced taxes on the extended warranties they sell. Buchanan can then invest the profits from these companies in offshore investments in order to defer taxes indefinitely – these investments include real estate developments in the Bahamas.[1]
In addition, according to his latest personal financial disclosure form,[2] Buchanan has invested between $13 million and $65 million of his money in hedge funds that benefit from tax loopholes he has voted against closing[3] – allowing them to classify income at the much lower capital gains rate instead of the income tax rate – and as much as $5 million of his annual income thus benefits from the tax advantage he has protected.
“Instead of exploiting islands like the Turks and Caicos or the Cayman Islands as a tax haven, Buchanan should have voted to stop offshore tax evasion,” said Rep. Sherman. “Unfortunately, he has refused to support H.R. 2136 and H.R. 2345, and a number of times voted to let hedge fund managers use these offshore islands to evade taxes.”
“Restoring fiscal discipline to Washington is of my top priorities,” said Christine Jennings. “Making sure everyone pays their fair share of taxes is an important step toward balancing the budget and paying down the debt, especially as our government faces so many other economic challenges. I couldn’t agree more with Rep. Sherman’s recommendations for closing these off-shore tax loopholes that allow too many people to escape paying their fair share.”
“We need more people in Congress like Christine Jennings,” said Rep. Sherman. “The economic knowledge demonstrated by Christine during her forty-year banking career will be such an asset to both her constituents and to her colleagues in Congress. I look forward to working with Christine on these issues when she is elected to the House of Representatives.”
[1] “Use of offshore companies helps Buchanan reduce his tax burden,” Sarasota Herald-Tribune, 10/31/06, http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20061031/NEWS/610310410
[2] 2007 Vern Buchanan Personal Financial Disclosure, http://www.opensecrets.org/pfds/candlook.php?CID=N00027626
[3] Buchanan voted against three bills regarding the Alternative Minimum Tax, which would have also closed tax loopholes affecting offshore arrangements and hedge funds, among other provisions (H.R. 6275, June 2008; H.R. 4351, Dec. 2007; H.R. 3996, Nov. 2007)
