Department of Defense Appropriations Act, 2015

Floor Speech

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Ms. DeLAURO. Madam Chair, I yield myself 2 minutes.

My amendment would prohibit Federal contracts issued by the Department of Defense from going to entities incorporated in Bermuda and the Cayman Islands, two nations most often abused as tax havens.

This body accepted a similar provision for the Departments of Transportation and Housing and Urban Development earlier this month.

According to a joint study by the U.S. Public Interest Research Group and Citizens for Tax Justice, 70 percent of the companies in the Fortune 500 used tax havens last year. These companies stashed nearly $2 trillion offshore for tax purposes, with almost two-thirds of that total, 62 percent, being hidden away by just 30 companies.

We just saw the medical device manufacturer Medtronic, a company founded in a Minnesota garage with deep roots throughout the State, announce it was effectively moving operations to Ireland to escape its tax obligations. This is a persistent and a growing problem, and we need to start taking action to rein it in.

We can start with this amendment. Of the companies who have established subsidies in tax havens, nearly two-thirds have registered at least one in Bermuda or in the Cayman Islands. The profits these companies claim were earned in these two island nations in 2010 totaled over 1,600 percent of these countries' entire yearly economic output.

These companies take advantage of our education system, our research and development incentives, our skilled workforce, and our infrastructure, all supported by U.S. taxpayers. They should not be allowed to pretend that they are an American company when it is time to get a defense contract, then claim to be an offshore company when the tax bill comes. We should not spend taxpayer money on Federal contracts to companies that have renounced their American citizenship in favor of an island tax haven.

As I said, a similar amendment became part of the Transportation and Infrastructure bill. I urge my colleagues to pass this amendment, and I reserve the balance of my time.

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Ms. DeLAURO. I thank the Chair.

Madam Chair, I and others have long fought for--and we have succeeded in passing through the appropriations process--a ban on Federal contracts for U.S. companies that acquire a business in a lower tax jurisdiction and claim their headquarters there, despite still being a U.S. company.

According to a 2009 GAO report, 63 of the 100 largest publicly traded U.S. Federal contractors reported having subsidies and tax havens in 2007. These companies are currently paying a tax rate of zero percent--zero percent. So unless you believe tax reform should eliminate taxes for U.S. companies, this avoidance is not about corporate tax reform.

We need to send that clear message. If a company is going to abuse the tax loopholes at the expense of businesses that are paying their fair share, they will not be rewarded with defense contracts.

I am happy to hear and I urge my colleagues to make this stand with me again and to pass this amendment.

I yield back the balance of my time.

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