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.”