Obama Helping Lobbyists Weaken Offshore Tax Crackdown Dems Passed in 2002 over GOP Opposition

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Obama Helping Lobbyists Weaken Offshore Tax Crackdown Dems Passed in 2002 over GOP Opposition

One of the few - and I sincerely stress the word "few" - concrete legislative successes progressives notched in the Republican Congress under President George W. Bush came on the evening of July 26th, 2002, when they humiliated the House into passing a bill sponsored by Rep. Rosa DeLauro (D-CT) banning federal contracts from going to companies that engage in tax "inversions." These are the schemes whereby a corporation that is based in the United States buy a P.O. box in Bermuda and use it to legally avoid paying American taxes.

The bill, reported Congressional Quarterly at the time, "was expected to fail [but] when the 15-minute voting clock ran out, DeLauro's amendment was five votes ahead." Ultimately, industry-owned Republican legislators who had tried to vote down the measure realized they weren't going to be able to stop it, and "after a nod from Republican leadership, more than 100 Republicans recast their votes to give DeLauro an avalanche victory." Having witnessed this firsthand on the floor of the House, I can tell you it was indeed a sight to see.

And yet in the now-Democratic Congress seven years later, with deficits exploding and the government clearly needing to strengthen any and all incentives for corporations to pay their taxes, I was more than disheartened to read this story in the Hill newspaper this week:

Multinational corporations are fighting to preserve language in a spending bill that would weaken a ban on federal contracts.

The provision, inserted in the Senate version of the bill at the request of the Obama administration, would weaken a ban on federal contracts for inverted companies...

Before the ban began in 2002, four of the 100 largest federal contractors were inverted, according to a Government Accountability Office (GAO) report.

In 2001, those four companies received $2.7 billion in federal contracts, but they have unable to win the contracts since the ban was put into place.

The Obama administration is justifying its push on the grounds that the ban may - at some point in the undetermined future - conflict with our trade agreements. It's a charge North Dakota Sen. Byron Dorgan (D) rightly calls "absurd."

What this is all about is corporate lobbying against provisions that both use taxpayer money to reward domestic companies that pay their fair share of taxes and disincentivize companies from trying to rip off the public through offshore "inversions." And it's one of the first examples we've seen of the Obama administration and the Democratic Congress potentially doing something even worse than the Bush administration and the Republican Congress.

Here we have a commonsense progressive tax measure that Democrats managed to pass and then expand under Bush and the GOP, and here we are less than a year into an era of full Democratic control of Washington watching Democrats aiming to weaken that tax measure. When you look at this move and remember that candidate Barack Obama himself promised to strengthen - not weaken - laws cracking down on offshore tax rip-off schemes, you wonder why we even waged that tough progressive fight back in 2002.

You wonder, in short, whether you are getting sold down the river.

David Sirota

David Sirota is a best-selling author whose new book "Back to Our Future" is now available. He hosts the morning show on AM760 in Colorado and is a contributing writer at Salon.com. E-mail him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

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