The Statement: In a campaign speech Friday, September 3 in Abington, Pennsylvania, Democratic presidential nominee Sen. Barack Obama said Republican Sen. John McCain supports helping businesses avoid paying taxes. "My opponent supports tax havens that let companies avoid paying taxes here in America - tax havens that cost $100 billion every year. (W)hat will work is shutting down those tax havens and closing corporate loopholes."
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The Facts: During an August 2007 trip to Bermuda, McCain told the Royal Gazette newspaper, that country's sole daily, that he was against legislation in Congress designed to clamp down on U.S. businesses that establish offices overseas in so-called "tax havens". "The industry ... that's had such phenomenal success, has been good for both nations - I would oppose any measures that would upset that," the paper quoted him as saying.
But in the past, McCain had spoken out against such practices. "More and more U.S. companies are using this highly profitable accounting scheme that allows a company to move its legal residence to offshore tax havens such as Bermuda, where there is no corporate income tax, and shield its profits from taxes," he said during a 2002 Senate debate. "I applaud efforts to discourage this practice."
On the campaign trail, McCain has called for lowering the corporate tax rate to encourage companies to keep their offices in the United States. "If you're a business person, and you can locate any place in the world, then, obviously, if you go to the country where it's 11 percent tax versus 35 percent, you're going to be able to create jobs, increase your business, make more investment," he said during the September 26 presidential debate. "I want to cut that business tax. I want to cut it so that businesses will remain in the United States of America and create jobs."
A report released in July by the Senate Permanent Subcommittee on Investigations said that some overseas banks help hide tax evasion "and add to the offshore abuses that cost U.S. taxpayers an estimated $100 billion dollars each year." Subcommittee Chairman Sen. Carl Levin, a Democrat, and ranking minority member Sen. Norm Coleman, a Republican, condemned the practice in a written statement.
The Verdict: True, but incomplete. McCain did say he opposed cracking down on the "havens" and the $100 billion figure Obama cited is true, according to a Senate report. But McCain had spoken out against the offshore banking practice in the past and he advocates cutting tax rates in the United States to make moving offshore less attractive.