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U.S. Senator Carl Levin (D. MI) marches on with his mission to close corporate tax loopholes:

http://www.bloomberg.com/...

Senator Carl Levin’s push to close tax loopholes will target corporate deductions for stock options and rates on investment income known as carried interest, seeking to raise at least $200 billion by one estimate.

In a memo to Democratic Senate committee leaders on Friday, the Michigan Democrat described proposals to end what he called excessive corporate tax deductions, scrap the blended tax rate for derivatives such as commodity futures and strengthen enforcement of the tax code, Bloomberg BNA reported.

Levin -- chairman of a Senate investigations subcommittee that has jurisdiction over offshore banking and tax practices and federal waste, fraud and abuse -- plans to introduce a measure called the Cut Unjustified Tax Loopholes Act. - Bloomberg, 2/4/13

Levin's plan would raise at least $200 billion over 10 years.  In his memo, Levin stated that corporations only pay 15% because of various deductions and loopholes even though the marginal tax rate is 35%.  Levin also state that thirty multi-national corporations paid no corporate income tax at all from 2008 to 2010.  The combined profits of these thirty large companies is $160 billion.  
“U.S. multinational corporations can use a myriad of tax loopholes to keep their taxes far lower than their domestic competitors,” Levin’s office said in the memo. - Bloomberg, 2/4/13
Title I of the Cut Unjustified Tax Loopholes Act (S.2075) calls for ending offshore tax abuses.  Title II calls for ending excessive corporate tax deductions for stock options:

http://www.levin.senate.gov/...

Bloomberg's article breaks down the main points of Levin's act:

Options Deductions
Levin’s proposal would require that corporations take stock option tax deductions at the time the options are shown in their expenses and would disallow deductions greater than the expense shown. Currently, corporations can deduct on their tax returns more than their actual expenses on stock options, the only type of compensation for which that is allowed, his office said.

That means corporations can report higher earnings to investors and reduce or eliminate those earnings on their tax returns. For example, he said, Facebook (FB) Inc. was able to book stock options given to its founder at six cents per share and later claim a tax deduction at $40 per share. Facebook was able to take a $16 billion tax deduction when it went public, and net loss carryforward rules will allow it to use the deduction to lower its tax bill for years, the senator’s office reported.

Blended Rate
The legislation Levin envisions would end a favorable “blended tax rate” that applies to certain derivatives. According to his memo, the short term capital gain from some derivatives, including commodity futures, is not taxed at the long term capital gains rate, but at a blended rate of 60 percent long term and 40 percent short term, even if the derivatives are held for seconds. The lower rate reduces taxes by about 10 percent, his office reported.

Hedge Funds
Levin would end the exclusion of tar sands oil from the Oil Spill Liability Trust Fund, which he said would recognize that oil sands and other unconventional oils have become a more significant part of the nation’s commercial energy industry. As much as half of the oil shipped to the United States from Canada in 2012 was from tar sands, and 30 percent of Canadian oil produced in 2011 was from tar sands, Levin’s office reported.

Levin also proposed that hedge fund managers be required to pay ordinary income tax rates on all of their income from management services, ending a carried interest loophole.

The senator also promised more than a dozen provisions related to offshore tax havens and potential abuses, resembling a list he provided to Senate Finance Committee members in 2012.

His new proposal would penalize offshore financial institutions and jurisdictions that impede U.S. tax enforcement; defer tax deductions for corporations that move jobs and operations offshore until the corporation repatriates the profits from offshore operations and pays taxes on them; and treat offshore funds deposited in U.S. bank accounts as repatriated funds subject to taxes, among other provisions. - Bloomberg, 2/4/13

Oh, and it case you were wondering, Levin will make his announcement about his decision to run again very soon:

http://wkzo.com/...

Spokesperson Tara Andringa tells the "Detroit Free Press" that just because Levin only raised a little over 13-thousand dollars doesn't mean he might not run again.  She says the senator has said consistently he'd make his decision in the first few months of 2013, and she expects that "in the next few weeks."

Levin is 78 and is the chairman of the Senate Armed Services Committee. - WKZO, 2/5/13

I'm not sure what decision Levin will make about 2014 but right now, he might a little focused on this:

http://www.chicagotribune.com/...

The government is seeking $5 billion in its civil lawsuit against Standard & Poor's, accusing the ratings service of defrauding investors, in one of the most ambitious cases yet from the Justice Department over conduct tied to the financial crisis.

The United States said S&P inflated ratings and understated risks associated with mortgage securities, driven by a desire to gain more business from the investment banks that issued those securities. S&P committed fraud by falsely claiming its ratings were objective, the lawsuit said.

Senator Carl Levin, who led a year-long inquiry into the causes of the financial crisis and singled out credit raters for blame, said in a statement the public was "eagerly awaiting" legal actions tied to the financial crisis.

"The credit rating agencies have yet to acknowledge any blame or make the changes necessary to prevent conflicts of interest from fueling more inflated ratings in the future," the Democrat from Michigan said. - Chicago Tribune, 2/5/13

Originally posted to pdc on Tue Feb 05, 2013 at 04:46 PM PST.

Also republished by In Support of Labor and Unions and The Democratic Wing of the Democratic Party.

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Comment Preferences

  •  Good stuff, Sen. Levin! (6+ / 0-)
    Recommended by:
    Sylv, Arlys, MrAnon, jan4insight, bear83, OooSillyMe

    Now THIS is some serious legislation on closing tax loopholes.  May it gain some serious support!

  •  Will this create more jobs or lower healthcare (1+ / 0-)
    Recommended by:
    Roger Fox

    costs. The only legislation that matters are the ones that create jobs and lower healthcare costs!

    "If the past sits in judgment on the present, the future will be lost." Winston Churchill

    by Kvetchnrelease on Tue Feb 05, 2013 at 05:04:09 PM PST

    •  You need revenue to help make that happen. This (4+ / 0-)

      act can do that.

      Funny Stuff at http://www.funnyordie.com/oresmas

      by poopdogcomedy on Tue Feb 05, 2013 at 05:16:07 PM PST

      [ Parent ]

    •  Great point, its not infrastructure spending, (0+ / 0-)

      it doesnt create jobs, it lowers the deficit, and who the fuck cares about the deficit.

      There 22 to 28 million Americans looking of full time year round work. And frankly even if the 200 billion over 10 years was spent on infrastructure.....

      Youre talking about 400,000 500,000 jobs

      But this dairy isnt talking about jobs, its talking about lowering the deficit, which contracts the economy, meaning we lose more jobs.

      Yawn.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Tue Feb 05, 2013 at 07:04:25 PM PST

      [ Parent ]

      •  Where in this diary does it mention deficit (1+ / 0-)
        Recommended by:
        bear83

        reduction?  And how do you create 22 to 28 million jobs?  Plus infrastructure is also important for the economy.  I get that you're a keynesian which is fine and I agree that the job creation needs to be key but you can't ignore tax reform or getting new revenue.  I mean corporations using loopholes to avoid paying taxes doesn't anger you?  It should.

        Funny Stuff at http://www.funnyordie.com/oresmas

        by poopdogcomedy on Tue Feb 05, 2013 at 07:11:40 PM PST

        [ Parent ]

        •  Infrastruture has a multiplier of 2-2.5 (0+ / 0-)

          We used to spend 5-6% of GDP on infrastructure, 2011 we spent 1.3%.

          If we spent 6% of GDP on infrastructure:

          15 trillion dollar economy, 6% is 900 billion spent - between 18 million and 22.5 million jobs. Leaving about 6 million without jobs, equal to about 4% unemployment with a civilian workforce of 154 million. 4% unemployment is about as good as it got during the Clinton Administration.

          Revenue is in the diaries title, more revenue lowers the deficit....no?

          Look this is a good bill, and its strong enough to stand on its own.

          FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

          by Roger Fox on Wed Feb 06, 2013 at 10:36:41 AM PST

          [ Parent ]

  •  Bravo Senator! (1+ / 0-)
    Recommended by:
    bear83

    Wouldn't it be ironic if this legislation met with a filibuster, given that you and McCain combined to push through a toothless filibuster reform rule.

  •  Too bad he sold out of filibuster reform... (4+ / 0-)
    Recommended by:
    Pluto, TrueBlueDem, bear83, lostinamerica

    Unless he thinks he can convince his BFF McCain and the rest of the Republican "gang" to sign on to this.  

    All this is is grandstanding because he knows it won't go anywhere.  

    I'm not going to put up with any of the filibuster sell-outs trying to pretend they have some great idea but just can't get the GOP votes...

    Keystone XL Pipeline - Canada gets the money, Asia gets the oil, America gets the toxic refinery pollution and potential for a pipeline leak ecological disaster.

    by Jacoby Jonze on Tue Feb 05, 2013 at 05:16:24 PM PST

    •  I was waiting for the first comment on that. Look (1+ / 0-)
      Recommended by:
      peregrine kate

      I'm not happy about Levin's stance on filibuster reform.  I think he's an old bull who was afraid filibuster reform would really hurt the Dems if they become the minority party again.  I'm not saying I support his stance but I kind of understand.  However, maybe he'll realize he was wrong on filibuster reform when he can't get this bill passed and that might lead to another call to reform it.  That fight is long from over.

      Funny Stuff at http://www.funnyordie.com/oresmas

      by poopdogcomedy on Tue Feb 05, 2013 at 05:20:02 PM PST

      [ Parent ]

      •  The appallingly long learning curve of certain (0+ / 0-)

        legislators is resulting in years and years of economic pain for the rest of us. "Oh well, maybe he'll learn eventually" is entirely too nonchalant about the whole thing. We've already lost critical reforms such as the public option, EFCA, and progressive tax reform to the filibuster. Oh gee, better luck next time!

        (-2.38, -3.28) Independent thinker

        by TrueBlueDem on Tue Feb 05, 2013 at 07:21:18 PM PST

        [ Parent ]

        •  I think you're taking my comment the wrong way (0+ / 0-)

          here.  I agree with your point but you didn't need to use snark to make your point.  My comment was meant to mean that if Levin actually witnesses the filibuster blocking his proposal, he's going to regret his decision against filibuster reform.  Now Levin did support switching the burden but yes I think he was wrong to not back it.  I also don't believe we should give up on filibuster reform and I think we should still make it a reality.  Also, I don't like snark in the comments.  Even if you do make a good point, snark just makes people come off as condescending and mean.

          Funny Stuff at http://www.funnyordie.com/oresmas

          by poopdogcomedy on Tue Feb 05, 2013 at 07:31:37 PM PST

          [ Parent ]

  •  No objection to ending carried interest, (1+ / 0-)
    Recommended by:
    nextstep

    certainly.  The "blended rate" he's talking about is the 1256 rate, and I seem to recall that a lot of thought went into making the rate what it is.  W/o a review of why we have it in the first place, it'd be tough to be fur or agin it.

    re: options: that's not a loophole in any sense of the word.  It's just the matching principle at work in the code.  When a corp pays compensation, it's income to the recipient and a deduction to the payer.  That's all that's happening here.  

  •  How about eliminating deductions from 'costs' (0+ / 0-)

    generated by transactions between a corporation and its affiliates, so that teeny offshore entities cannot enter into deals with the Daddy companies affiliated with it whose purpose is to eliminate US income of the Daddy company. If the companies are close enough to one another,  why should they be treated as separate entities for deduction generating purposes?

  •  Me Likey (1+ / 0-)
    Recommended by:
    GwenM

    I agree I'd rather see a stimulus, or jobs bill, BUT since
    The Very Serious People insist on reducing the debt, and
    closing loopholes will increase revenue and lead to that end, it falls into a cata gory of shutting up the morons while not hurting the middle class.

    I also like that it spells out loophole/reform to NOT include something like taking away a tax deduction from the average person, such as, mortgage deductions!

    I love how the DC folks yell for reform, and then it turns out that means take away the deductions for the average person, and leave all the stuff for the 1% in place! That especially PISSES me OFF!

  •  Why is everything multiplied by 10 these days? (1+ / 0-)
    Recommended by:
    johnny wurster

    $200 billion sounds good until one realizes that it's really just $20 billion per year.

    Or about 2% of the the annual budget deficit . . .

  •  My hunch is Levin runs again (0+ / 0-)

    He's still the junior Levin in Congress, and I really doubt he retires before Sandy

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