Dem tax evasion bill targets offshore companies, falls short of WH proposal

Senior Democrats unveiled a bill Tuesday aimed at getting offshore companies to pay taxes and operate more transparently, a priority for the White House and Democratic leaders.

The proposal, by Senate Finance Chairman Max Baucus (Mont.), House Ways and Means Chairman Charlie Rangel (N.Y.), Sen. John Kerry (Mass.) and Rep. Richard Neal (Mass.) would hit foreign bank customers with a 30 percent income tax on their U.S. assets if their banks failed to reveal the identities of their U.S. customers and those customers' banking activity. The bill would also slap fines on those who failed to report foreign accounts worth more than $50,000 and on financial advisers who helped set them up.

"These tax evaders cost our country tens of billions of dollars every year in unpaid taxes, and honest, law-abiding taxpayers pay the price," Baucus said in a statement. "Not only is this practice fundamentally unfair, this is money that could be used in any number of other important areas, such as reducing our fiscal deficits."

Democrats said the bill would generate $8.5 billion in revenue for the government over a decade.

They said that the proposals would bolster Internal Revenue Service (IRS) efforts against tax cheats, now hampered by laws that prevent government agents from tracking accounts.

President Barack Obama said that the bill was in line with his own proposals laid out earlier this year to crack down tax evasion.

"The legislation introduced today would fulfill that promise, putting a stop to billions of dollars worth of abuses," Obama said in a statement.

The bill, however, didn't include an Obama proposal to make it easier for prosecutors to go after individuals using offshore accounts to avoid taxes. Baucus's bill  also left out a proposal by Sen. Carl Levin (D-Mich.) and Rep. Lloyd Doggett (D-Texas) to treat offshore companies with U.S.-based executives as American companies for tax purposes.

Doggett said it was "very good to finally see some action on tax abuse," but he added that the proposal "stops short of targeting all fat cats."

"U.S. corporations should not be able to dodge U.S. taxes simply by filing a piece of paper and renting a foreign mailbox," Doggett said in a statement.

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