Caterpillar Inc. is likely to get some Republican support
Tuesday when the giant maker of construction and mining equipment
faces criticism of its accounting policies at a Senate subcommittee
hearing.
A report on Caterpillar's tax-avoidance strategies, to be
released before the hearing of the Senate's Permanent Subcommittee
on Investigations, has been spearheaded by Sen. Carl Levin, the
Michigan Democrat who chairs the panel. But Sen. John McCain, the
Arizona Republican who is the ranking minority member on the
subcommittee, is expected to dissent from at least some of Sen.
Levin's criticism.
The two Senators usually work well together, a spokesman for
Sen. McCain said Thursday, but "they disagree on this one." He said
Sen. McCain doesn't believe Caterpillar's tax practices are as
"egregious" as Sen. Levin does. Tax Analysts, a newsletter, earlier
reported that Sen. McCain was "distancing himself" from the
report.
A spokeswoman for Sen. Levin declined to comment.
Among other things, the report is expected to examine
allegations by a former Caterpillar executive that the company
improperly shifted income to overseas subsidiaries to slash its tax
bill. Caterpillar has denied that charge.
In May 2013, both Sens. Levin and McCain were critical of Apple
Inc. when the subcommittee issued a report on that company's
tax-reduction strategies. "It is unacceptable that corporations
like Apple are able to exploit tax loopholes to avoid paying
billions in taxes," Sen. McCain told the subcommittee. He described
Apple's tax strategy as a "scheme."
The subcommittee's investigation found no evidence that Apple
did anything illegal. Apple told the panel that it paid all taxes
due and argued the U.S. tax code needed a "dramatic
simplification."
Caterpillar is expected to argue that its tax payments aren't
low. A spokeswoman earlier this week said the company's effective
tax rate has averaged about 29% in recent years. A report by the
U.S. Government Accountability Office, released last year, found
that large, profitable U.S. corporations paid an average effective
federal tax rate of 12.6% in 2010.
Write to James R. Hagerty at bob.hagerty@wsj.com
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