Senate report says Caterpillar avoided billions in taxes

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A new report from U.S. Sen. Carl Levin, chairman of the Senate Permanent Subcommittee on Investigation, says Caterpillar Inc. avoided paying $2.4 billion in taxes by shifting billions of dollars in profits to a wholly owned Swiss affiliate.

The report, which was compiled by the subcommittee’s majority staff, concluded that Caterpillar shifted $8 billion in profits from its parts manufacturing division in the United States to Switzerland, ABC News reported.

Caterpillar negotiated a tax rate of 4 percent to 6 percent with Switzerland, whose federal statutory tax rate is typically 8.5 percent.

“In the fantasyland of international tax, Caterpillar waved a magic wand to make billions of dollars in U.S. taxes disappear,” Levin told ABC. “This is a prime example of a tax avoided strategy that cost the U.S. Treasury billions of dollars.”

In a statement sent to ABC News Monday, Caterpillar said it has complied with tax laws.

“Caterpillar takes very seriously its obligation to follow tax law and pay what it owes,” Julie Lagacy, vice president with responsibility for the finance services division, said in the statement to ABC. “In fact, Caterpillar’s effective income tax rate averages about 29 percent, which is one of the highest for a U.S. multinational manufacturing company.”

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Comments

5 comments on “Senate report says Caterpillar avoided billions in taxes

  1. Garret Law

    Congress writes and the Treasury interprets the thousands and thousands of tax laws. Then thousands of accountants use these laws to advise the business community and plan their tax strategy to pay the required taxes. If Carl Levin does not like the tax results, maybe he should start by looking at the system Congress has created.

  2. Bryon Kass

    Its rather simple and widespread. Most multinational companies like CAT sell stuff overseas and keep the revenue there due to the draconian US tax rates. What we need to do is get rid of senators like Levin and elect those who support business and fair corporate tax rates. Also those who do not spend more than they take in. That goes for the POTUS as well. Kind of kills the Dems as viable candidates who prefer to take from business and give it out pandering to their voting base.

  3. Bill

    I sort of recall a big auto manufacturing base in Mr Levin’s home state, not too many years ago…keep up the good work Congress.

  4. AnonymousBob

    Observation time:
    No one applauded Irwin Jacobs’ use of available, and legal, bankruptcy laws when Genmar filed for bankruptcy. But, when Caterpillar uses available, and legal, methods to skirt some of their responsibility to US taxpayers, they are lauded here.
    I am constantly amused by people in the marine industry. I just stick around for the laughs.

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