From: Clinton for President <75300.3115@compuserve.com>
Newsgroups: alt.politics.clinton
Subject: TAX AVOIDANCE BY FOREIGN CORPORATIONS 9/29/92
Date: 10 Oct 92 06:33:09 GMT

[FCCTAX.TXT file date 9/29/92]  Please distribute

                           PLAYING BY THE RULES

                   TAX AVOIDANCE BY FOREIGN CORPORATIONS

 While American taxpayers are working harder for less, huge
 multinational corporations with billions of dollars in U.S. sales are
 using accounting gimmicks to pay outrageously low U.S. taxes. Foreign
 controlled companies in the U.S. are avoiding paying their fair share
 of U.S. taxes by inflating costs through transfer pricing.

 *    By the IRS's own admission, 72 percent of foreign-controlled
      corporations doing business in the U.S. paid no U.S. income tax
      in 1989.  [IRS Commissioner Shirley Peterson, April 9, 1992
      testimony before the House Ways and Means Subcommittee on
      Oversight]

 *    Forty percent of the returns filed by 18 foreign electronic
      distributors showed no tax due while reporting $30 billion in
      sales. One company with sales in excess of $6.6 billion paid no
      U.S. tax at all.  [House Ways and Means, 1992]

 *    In 1985, 17 foreign-controlled companies with U.S. subsidiaries
      had $16.7 billion in receipts and paid $1 billion in taxes.  By
      1989, these firms had quadrupled their receipts to $63.6
      billion.  However, their taxes decreased by almost $600 million.
      [House Ways and Means, 1992]

                    BIPARTISAN AGREEMENT ON THE PROBLEM

 Several Republican lawmakers think the revenue potential is even
 greater than the numbers in the Clinton Plan.

 *    Senator Jesse Helms (R-NC) and Representative Duncan Hunter
      (R-CA) stated that foreign companies should have paid $30
      billion more in corporate income taxes in 1988.  [Chicago
      Tribune April 9, 1992]

 *    Republican Senator Alphonse D'Amato, who also placed the lost
      revenue at $30 billion annually, recently wrote that "it is an
      outright crime that for over a decade foreign companies have
      been cheating the American taxpayer and the government out of
      billions each year." [June 22, 1992 letter to Congress]

 *    Democratic Representative J.J. Pickle, Chairman of the House
      Ways and Means Subcommittee on Oversight, wrote that "it is the
      failure to collect legally-owed taxes from foreign
      multinationals that puts American workers at a competitive
      disadvantage."

                           BUSH'S FAILURE TO ACT

 Foreign corporations continue to avoid paying their fair share of
 U.S. taxes and the Bush Administration does nothing.

 *    The House Ways and Means Committee said that the IRS is
      "outgunned and outmanned."  And even though last month's
      hearings documented that foreign-controlled firms still aren't
      paying their fair share, President Bush's FY 1993 Budget does
      not include additional resources for the IRS to enforce existing
      law. [President's FY 1993 Budget]

 *    Since the Oversight Subcommittee's hearings in 1990, the IRS has
      failed to complete even one international simultaneous audit.
      [IRS response to Representative Pickle, April 8, 1992]

 *    Tax expert Thomas Field of Tax Analysts said that the IRS
      typically settles for 10 cents on the dollar of its initial
      claims against foreigners, and, according to Newsweek, "the IRS
      doesn't      dispute that."  [Newsweek April 15, 1991]

 The Administration does not take positive action, and even actively
 discourages solving the problem.

 *    Former IRS officer Edward Romoff, one of the first IRS officials
      to investigate transfer price abuses, testified that "he was
      consistently harassed, chastised and threatened" for his
      investigation of the transfer price problem.  [HWM Subcommittee
      Testimony, April 9, 1992].

 It is not surprising that the Administration does not encourage
 foreign corporations to pay their fair share when almost half of all
 former senior trade officials represent foreign countries.

 *    The Center for Public Integrity reports that 47% of former
      senior officials of the office of U.S. Trade Representatives,
      including their former Trade Representatives, have registered,
      or    work for firms registered as, foreign agents.  Carla Hills
      is the first U.S. Trade Representative to have been registered
      as a foreign agent before entering office.  [Charles Lewis,
      America's      Frontline Trade Officials, Center for Public
      Integrity, 1990]

                            THE CLINTON PLAN

 Governor Clinton understands the importance of foreign investment as
 can be seen by his record in Arkansas; he just wants companies to pay
 what they rightfully owe -- their fair share.

 *    Governor Clinton is not creating a new tax, he just wants to
      enforce the law.  Under the Clinton plan, those companies that
      play by the rules pay no additional taxes.  In fact, most
      companies will pay less because of the Clinton plan's targeted
      investment tax credit and R&D tax credit.

 *    With Clinton as Governor, Arkansas has tripled the number of
      companies in Arkansas with foreign investment -- the number of
      foreign companies investing in Arkansas has grown from 35 to
      104, with much of the progress coming from the successful
      foreign trade missions.

                           -30-30-30-

 BUSH SPENDS HUNDREDS OF MILLIONS OF TAXPAYER DOLLARS
 TO SHIP OUR JOBS OVERSEAS

      As revealed in a 60 Minutes expose this past weekend, taxpayers
 are paying to encourage U.S. firms to move their jobs overseas.
 Under Bush and Reagan, the U.S. Agency for International Development
 has spent hundreds of millions of dollars to encourage firms to move
 to Central America - - with much of the effort targeted at U.S.
 firms.

 *    U.S. manufacturers that move jobs to Central America and the
      Caribbean receive low interest loans, free worker training,
      construction of office and manufacturing space, and an
      elimination   of tariffs.  At least $289 million have gone to
      these programs and for promotion of "export zones."  These
      programs are administered by the State Department under James
      Baker's supervision.

 *    The U.S. government spends more for worker training overseas
      than George Bush wanted to spend on trade adjustment assistance
      worker training here at home.

 *    The "export zones" target the U.S. textile and electronics
      industries.  In recent years, some 500,000 textile and apparel
      jobs and 200,000 electronics workers lost their jobs here in the
      U.S.

 *    Since 1990, the same U.S. companies that have been operating in
      Central America have been involved in 65 plant closings and 13
      mass layoffs at their factories in the United States.  Almost
      15,000 workers -- many of whom are women struggling to help
      support their families -- have lost their jobs.

 *    U.S. taxpayers paid for an ad campaign that encouraged
      businesses to ship jobs to lower-paying  El Salvador.  "Rosa
      Martinez produced apparel for U.S. markets on her sewing machine
      in El Salvador," the ad read.  "You can hire her for 57 cents an
      hour.  Rosa is more than just colorful.  She and her co-workers
      are known for their industriousness.  They make El Salvador one
      of the best buys."  The ad was funded by FUSADES, an El
      Salvadoran export promotion group that is almost entirely funded
      by U.S. tax dollars, and that has offices in the U.S. seeking to
      woo American firms.  In a 1991 agreement, U.S. AID instructed
      FUSADES that "within the U.S., the regions with the greatest
      concentration of relevant firms are likely to be in the
      Northeast and Southeast."  Similar programs have been set up in
      Guatemala, Honduras, Jamaica, Costa Rica and elsewhere.

 *    There's no better example of paying to lose our jobs than the
      Marcade Group's Decaturville, Tennessee plant, which was closed
      last year.  The jeans and other goods that were made in
      Tennessee are now made in El Salvador, with loans and
      construction partly paid for by the U.S. government.

 U.S. law prohibits duty-free imports from countries that violate fair
 labor standards, such as the right to organize unions.  But a U.S.
 government official, taped by a 60 Minutes hidden camera, said that
 managers of the Export Zones will screen out potential workers who
 might want to join a labor union.  Half a dozen managers of firms
 operating out of a U.S.-financed zone told CBS that workers who want
 to join unions can be fired on the spot, and their names placed on
 blacklists.

      Whose side is George Bush on?  His government refuses to support
 job training here at home; he supports tax breaks to move jobs
 overseas.  And he attacks Bill Clinton's plan to require foreign
 corporations to pay the same taxes as domestic firms.  Now it turns
 out that his government is actively working to persuade American
 businesses to move abroad.

      It's time we had a President who put people first -- and who
 stood up for American workers and American interests.

 [SOURCES: CBS 60 Minutes, "Hire Rosa Martinez", 9/27/92; Paying to
 Lose Our Jobs, National Labor Committee Education Fund in Support of
 Worker and Human Rights in Central America; LA Times, 9/24/91]

                               -30-30-30-



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