Offshore tax-haven crackdown is pledged

Treasury Secretary Timothy Geithner said yesterday that the U.S. government would mount an "ambitious" program to crack down on companies that use offshore locales to avoid paying taxes.

Tracking down scofflaws and closing loopholes are especially important when the economy is deteriorating and the government is running a record budget deficit, Geithner told the Senate Finance Committee.

"We're going to have a much more ambitious effort to deal with offshore tax havens," Geithner said in response to questions from the panel. Allowing companies and individuals to escape paying their fair share "isn't fair, particularly given the scale of the fiscal challenges we inherited," he said.

A congressional report in January found that 83 of the 100 largest publicly traded U.S. companies had units in low-tax or no-tax countries such as the Cayman Islands in 2007. They included American International Group Inc., Citigroup Inc., Bank of America Corp., and Morgan Stanley, all of which were given taxpayer money in last fall's $700 billion financial rescue.

Geithner told senators that the Internal Revenue Service was asking for increased funds to pursue tax cheats and that the Obama administration was "going to look at the full range of ideas" for reining in offshore abuses.

The Treasury chief's confirmation before the Senate Finance panel was stalled in January after he agreed to pay the IRS almost $50,000 in back taxes and interest. As secretary, Geithner oversees the IRS.

Yesterday, he pressed lawmakers to work with the administration to cut the $1.3 trillion budget shortfall this year and reiterated the administration's pledge to cut the deficit to $533 billion, or 3 percent of gross domestic product, by 2013.

Last week, President Obama proposed a $3.55 trillion fiscal 2010 budget. It would result in a $1.17 trillion deficit.