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Dem senator takes another crack at tax havens

The senator’s new proposal looks to, among other things, give the Treasury Department new tools to face down offshore banks that do not cooperate with the IRS.

It would also make all credit default swaps (CDS) that originate in this country subject to U.S. taxation. As it stands, how CDS payments are taxed depends on where the money is sent, meaning not all swaps that begin in America can be taxed here.

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The measure additionally aims to define companies that are incorporated offshore but have most of their management or operations in the U.S. as domestic companies for tax purposes. And it would force multinationals to give the Securities and Exchange Commission basic facts about its operations in other countries, such as its number of employees and tax obligations.

In the end, Levin said that he did not know exactly how much of the lost $100 billion his bill could help recover, but asserted that he would like to see any new revenues used to pay down deficits. 

But while policymakers are scrambling to find a deal to raise the $14.3 trillion debt ceiling by the Aug. 2. deadline, taxes have proven to be arguably the most contentious part of the current talks.

Democrats including President Obama have stressed that fresh revenues must be part of any deal. But Republicans have said that the sort of tax breaks that Democrats want to scrap — such as provisions for corporate jet owners and the oil-and-gas industry — should be looked at within a broader push to overhaul the tax code and perhaps used to help pay for lower tax rates. 

Levin did say Tuesday that, while he preferred new revenues from tax havens be earmarked for deficit reduction, using them in a tax reform package was better than keeping the offshore tax system the way it is. 

The Michigan lawmaker added that he thought corporate opposition and the complicated nature of the issue had stood in the way of getting his bill passed in previous years. Some provisions Levin has pushed in those measures, such as closing offshore dividend loopholes, have made it into law. 

“When you’re up against complexity, when you’re talking about default swaps, your average person is not going to have any idea what you’re talking about,” Levin said.

But the Democrat also noted that Sen. Kent Conrad (D-N.D.), the Budget Committee chairman, had made tackling tax havens part of his 2012 budget framework. Four other senators have signed on to Levin’s legislation, and Rep. Lloyd Doggett (D-Texas) plans to introduce a House measure on the issue. 

For his part, Obama twice signed on to Levin’s tax haven legislation before being elected to the White House. 

“We’re very much hoping he will remember what he did when he was a senator,” Levin said.