"Corporations that flee the United States to save millions in taxes should not be allowed to compete for government contracts with American companies that play by the rules," Collins said. "These companies create phony foreign headquarters in a file folder or a mail box to escape taxes and then use other peoples'' taxes to turn a profit. That''s really something -- something we need to stop."
Senators Collins, Charles Grassley(R-IA), and Max Baucus(D-MT) introduced the Reclaiming Expatriated Contracts and Profits (RECAP) Act. The bill complements their earlier legislation, the Reversing the Expatriation of Profits Offshore (REPO) Act, to shut down corporate inversions. That bill passed the Finance Committee in June and is awaiting full Senate consideration as part of a pending bill to increase charitable giving.
The RECAP Act bars future corporate inverters from receiving federal contracts. For those companies that already have inverted, the RECAP Act makes them send back their ill-gotten tax savings by forcing them to lower their bids to obtain future government contracts. These inverters will have to lower their bid by 10 percent to be competitive, which will level the playing field for federal contractors that loyally stay and pay in the United States. The RECAP bill does not unwind federal contracts that were legal when entered into, and therefore, unlike other proposals, will not cause thousands of Americans to lose their jobs. Recently, a series of politically motivated amendments have been offered in Congress purportedly to address the issue of inverted companies receiving government contracts. These amendments were ineffective, easily evaded, and, if enacted, could cost thousands of Americans their jobs because of their retroactive application.
"The defense appropriations conferees recently dropped one of those amendments rather than try to rewrite it," Collins said. "I, together with Senators Grassley and Baucus decided enough is enough. It''s time for serious legislation on this issue."
According to an Oct. 1, 2002, analysis by the General Accounting Office, Tyco had more than 1,700 governments contracts in 2001, worth over $286 million. Accenture had contracts worth nearly $279 million. Ingersoll Rand left the United States for Bermuda, where it reportedly pays less than $28,000 a year to register its phony headquarters and receives $40 million in U.S. tax savings. Ingersoll Rand had government contracts in 2001 worth $36 million. Collins said she will work on this legislation in the next Congress if time runs out for consideration this year. ###