Today in the nation's capital, representatives of Peoria-based Caterpillar defended themselves in a Senate Permanent Subcommittee on Investigations hearing. Caterpillar is accused of avoiding $2.4 billion in US taxes through a profit transfer scheme. WGLT's Washington Correspondent Hanna Gutmann reports from Capitol Hill.
Committee Chairman Carl Levin scolded Caterpillar for moving profits from the sales of replacement parts through a Swiss affiliate set up to avoid U. S. taxes.
"The Swiss tax strategy shifted $8 billion in profits from the Caterpillar US to its affiliate in Switzerland."
Caterpillar Financial Services Vice President Julie Lagacy defended the Swiss structure as legal and logical.
"We cannot remain competitive, we cannot create jobs and we cannot increase exports by incurring unnecessary expenses."
Some Republicans came to Caterpillar's defense saying it has an enviable employment record and pays a higher tax rate than most corporations. They blame the relatively high US business tax rate for avoidance schemes. But Levin hammered Caterpillar about the legality of thier tax haven.
Kentucky Senator Rand Paul, a member of the committee, said Caterpillar deserves an award.
"Legal behavior to minimize your taxes is really your responsibility if you have stockholders, you have to do that. It is a requirement that you try to minimize your costs. So rather than chastising Caterpillar we should be complimenting them."
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