| WASHINGTON, March 31
WASHINGTON, March 31 General Electric Co
has lobbied more aggressively than any other corporation to
preserve a tax loophole that lets multinationals shelter
offshore financial profits from U.S. taxes, an activist group
said on Monday.
As Congress considers the annual renewal of scores of tax
breaks, Americans for Tax Fairness released a study focused on
the "active financing exception (AFE)," enacted in 1997, which
U.S. companies use to avoid taxes on offshore financial income.
"No company has lobbied more aggressively on the AFE or
benefits more handsomely than General Electric," said the group,
which is backed by labor unions and progressive political
organizations, in the 25-page study.
GE spokesman Seth Martin said, "This report distorts the
facts and reflects a politically motivated agenda from its
authors. The truth is that active financing applies the same
rules to financial services that permanently apply to every
other U.S. business sector."
He said: "Lawmakers on both sides of the aisle and respected
third-party experts agree that these rules should be a permanent
feature of the tax code."
Every year, Congress gears up to renew about 55 "temporary"
tax breaks known as the "extenders" list. These include the
active financing exception and scores of other provisions.
The Americans for Tax Fairness study analyzed tax lobbying
activity in Congress between January 2011 and September 2013,
using data from the Center for Responsive Politics, a
non-partisan watchdog group on campaign finance and lobbying.
The study said that over the 33-month period, 1,359
individual lobbyists reported doing work on Capitol Hill related
to tax extenders for 373 companies and trade associations. That
was equal to about 2.5 lobbyists for each member of Congress on
the extenders issue alone, the study said.
GE employed 48 lobbyists over the study period to work on
tax extenders and the AFE, "more than any other corporation or
trade association in both cases," the study said.
Americans for Tax Fairness said other businesses that lobby
on behalf of the exception include banks, insurers and financial
firms. Citigroup, for instance, employed 29 lobbyists on the
same issue, the second-most after GE, the study found.
A Citigroup spokeswoman declined to comment.
Written into law in 1997, the active financing exception
deals with certain types of corporate income derived from "the
active conduct of a banking or financing business," according to
the Joint Committee on Taxation of Congress.
Under the tax code, businesses with overseas profits do not
have to pay income tax on those profits until they are brought
into the United States, as long as they are "active," or derived
from actively managed businesses, as opposed to "passive."
The active financing exception exempts from immediate
taxation certain types of income that could otherwise be treated
as passive, including dividends, interest, rents and royalties
received by one corporate unit from another.
Corporations that use the AFE defend it as a valid carve-out
for profits that are the result of strategic business decisions
and that help U.S. businesses compete against foreign rivals.
Critics call the AFE a loophole for financial interests.
Both the Senate Finance Committee and the House of
Representatives Ways & Means Committee, which deal with taxes,
have begun to discuss dealing with the "extenders," including
the AFE, which technically expired at the end of last year.
But no conclusive action on them is expected until after the
mid-term congressional elections in November, policy analysts
said. The items on the list are often renewed retroactively
(Editing by Howard Goller and David Gregorio)