Holder legacy as tax-cheat catcher — But not everyone viewed him with rose-colored glasses — GOP to Holder: Good riddance
HOLDER LEGACY AS TAX-CHEAT CATCHER. Attorney General Eric Holder, who on Thursday announced he’s stepping down, made some pretty huge contributions to tax land during his six years on the job. Continuing the work his predecessor started prosecuting Swiss bank UBS, Holder maintained the department’s laser focus on tax evasion, starting investigations into multiple foreign banks, prosecuting individuals hiding money and even indicting Credit Suisse for helping Americans evade taxes. Those efforts helped scare thousands of tax avoiders into the IRS’s amnesty program, where they came clean and paid back taxes.
Former Justice tax lawyer Robert J. Kovacev said Holder also did much to combat corporate tax shelters and always made sure the DOJ tax division had a full armory to prosecute tax matters — they never wanted for resources, he said. The division under Holder also prioritized prosecuting identity theft and shady tax preparer practices, even as new problems have blipped up on the radar in recent years.
BUT NOT EVERYONE VIEWED HIM WITH ROSE-COLORED GLASSES. Critics say he could have gone harder on Swiss banking secrecy but didn’t because of his Swiss connections. In the private sector, he represented Swiss bank UBS, the first bank caught red-handed helping tax dodgers. Although the department was prosecuting UBS whistleblower Brad Birkenfeld before Holder took office, Dean Zerbe, Birkenfeld’s lawyer, said it was “during Holder’s tenure that the DOJ sought to impose significant jail time” on Birkenfeld, which “was extremely counterproductive to the government’s goals of encouraging knowledgeable whistleblowers to come forward.”
Holder was also the one who advised President Bill Clinton to make an extremely controversial pardon of big money-tax avoider Marc Rich, who was hiding in Switzerland. More recently, his critics on Capitol Hill, including Sens. Carl Levin and John McCain, have accused Justice of going soft on the Swiss banks instead of dogging them and making their lives miserable until they hand over the names of their American clients. Justice is still struggling to get the names of thousands of tax cheaters that had accounts overseas.
GOP TO HOLDER: GOOD RIDDANCE. Then there’s the IRS scandal side of all this. Even if Holder had ended banking secrecy forevermore, Republicans would still be happy to see him go. For months now, they’ve begged him to appoint a special prosecutor to investigate the IRS scandal after raising concerns about the credibility of some investigators. Senate Republicans will no doubt use the confirmation hearings for Obama’s new DOJ appointee to grill him or her about a special prosecutor.
BRADY GOES ON RECORD AGAIN: HE WANTS TO CHAIR WAYS AND MEANS. House Ways and Means Committee member Kevin Brady isn’t going to give up his chance at committee chairman without a fight. The Texas Republican sat down with The Washington Post to formally announce his plans to challenge Rep. Paul Ryan (R-Wis.) for the top tax-writing slot.
That shouldn’t be news to any of you Pro readers though. Brady has been telling reporters that he wants the job since last year. More recently, he told reporters in a hallway gaggle in February that he was planning to make the case to House leaders that he should chair the committee.
“I’m prepared and qualified to lead the committee. I’m going to make that case to our colleagues,” Brady told reporters in a brief hallway conversation. At the time, he declined to comment on talk that Ryan already had the job wrapped up.
Read more: http://politico.pro/1BdgMeO
The Washington Post story is available here: http://wapo.st/1yt4HG8
WELCOME TO FRIDAY. With the looming weekend also comes the end of my time as your guest host of Morning Tax. I may be back in a few weeks but next up is Ms. Rachael Bade! I’m still always in the market for your tax tips and thoughts. Send it all to ksnell@politico.com or tweet me: @kelsey_snell. You can also reach my Morning Tax partners in crime: Rachael Bade (rbade@politico.com) and Brian Faler (bfaler@politico.com).
DO FOREIGN COMPANIES HAVE AN ADVANTAGE UNDER INVERSION RULES? There has been a lot of speculation this week about how new rules issued by the Treasury DepartmenT regulating companies moving their tax address overseas through a corporate tax inversion might impact foreign companies. Barney Jopson at The Financial Times writes that foreign companies have a distinct advantage in the post-inversion rules landscape.
“As a result of the measures, a US company’s offshore cash would become cheaper to access if it were acquired by a European rival than if the US company did an inversion. he writes. “European companies have spent $173bn so far this year on acquisitions of US businesses, according to Dealogic. The deals have been driven more by a desire for exposure to the faster-growing US market than by the attractions of offshore cash.”
Read more: http://on.ft.com/1rnxvcR
COLORADO VOTERS OPPOSE INVERSIONS. A majority of Colorado voters support Senate candidates who want to close corporate tax loopholes and end tax breaks for corporations that move jobs overseas, according to a new poll conducted by left-leaning Public Policy Polling.
Democrats hope the results will help them in their bid to limit tax inversions after a string of companies, including Walgreens and Burger King, announced plans to purchase foreign companies and move their tax base outside the United States. Republicans say inversions are not a “loophole,” but a logical response to the high U.S. corporate tax rate.
Voters said they widely oppose corporations like Burger King buying foreign companies in order to move their tax base offshore. Half of all voters polled said they strongly disapprove of the Burger King deal and another 19 percent somewhat disapprove.
Of the 625 people polled, 34 percent identified themselves as Democrats, 33 percent as Republicans and 34 percent as independents.
SWITZERLAND TO ABOLISH CORPORATE TAX BREAKS. The Swiss Federal Council announced Thursday that the government plans to end some corporate tax breaks that violate international standards.
The taxes in question are primarily at the cantonal level, similar to the state level in the U.S., and are available to a wide range of companies, reported Ulrika Lomas at Tax-news.com.
“By using a practice known as ‘ring fencing,’ cantons can tax multinationals’ foreign profits at a lower rate than their domestic earnings. By abolishing these statuses, Switzerland aims to bolster the nation’s status as a leading business location with an attractive tax regime.”
