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Caterpillar Avoided Billions in Taxes

Caterpillar, the global construction equipment manufacturing firm with a plant in Bogart, dodged $2.4 billion in taxes, according to a U.S. Senate report.

The company did it by shifting $8 billion in profits from the U.S. to a Swiss affiliate. Caterpillar negotiated a 4–6 percent tax rate with Switzerland (the usual rate is 8.5 percent).

“In the fantasyland of international tax, Caterpillar waved a magic wand to make billions of dollars in U.S. taxes disappear,” said Sen. Carl Levin (D-MI), who led the investigation. “This is a prime example of a tax avoided strategy that cost the U.S. Treasury billions of dollars.”

Caterpillar paid the accounting firm Pricewaterhousecoopers $55 million to come up with the tax strategy.

Company executives’ response to the report was basically, “Too bad, suckers.”

I want to emphasize, Caterpillar complies with the U.S. tax laws, and we pay everything we owe,” said Julie Lagacy, vice president of its finance services division.

Sen. Rand Paul (R-KY) called Senate hearings on the subject an “inquisition” and said Caterpillar deserves an award.

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