ROANOKE TIMES 

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, July 13, 1990                   TAG: 9007130696
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A/2   EDITION: EVENING 
SOURCE: 
DATELINE:                                 LENGTH: Medium

TAX-DODGING CORPORATIONS TARGETED

Not since Congress declared war on drugs have lawmakers found such a tempting target. Democrats and Republicans now are raining fire on a common target: tax-dodging foreign corporations.

"What we have here is the granddaddy of tax avoidance," Rep. Byron Dorgan, D-N.D., said.

Lawmakers see big bucks at stake - money that could be used to cut the budget deficit without imposing more burden on individuals. Some members of Congress insist the government is being cheated of as much as $50 billion a year, although Bush administration officials are skeptical.

Whatever the figure, the prospect of reining in big-time cheats was enough to unite such diverse politicians as House Majority Leader Richard Gephardt, D-Mo., Sen. Jesse Helms, R-N.C., and Rep. Duncan Hunter of California, chairman of the House Republican Research Committee.

"Before we raise taxes," Gephardt told the House Ways and Means oversight subcommittee Thursday, "we should look at the profitable operations of foreign-controlled corporations that don't pay any at all."

Hunter released a list of Japanese companies, compiled from newspaper reports, that he said are being investigated by the Internal Revenue Service on suspicion their U.S. subsidiaries have underpaid. The list included such well-known giants as Sony, Hitachi, Toshiba, Nissan, Toyota, Yamaha and Matsushita (Panasonic).

The IRS told the subcommittee earlier in the week that in 1987, the nearly 45,000 foreign-controlled U.S. corporations had receipts totaling $686 billion and paid income tax of only 0.66 percent of that total. U.S.-owned companies paid a 1.04 percent rate.

For nine months the subcommittee has been investigating 36 foreign-controlled subsidiaries and found that over a 10-year period, most of them paid little or no U.S. income tax.

The chief means of avoiding tax was through "transfer pricing." By manipulating prices at which it sells goods to its U.S. subsidiaries, a foreign company could significantly reduce the amount of taxable income subject to U.S. tax.

- Associated Press 


 by CNB