Caterpillar Inc. Gets Caught Evading Taxes

American-formed manufacturing organization, Caterpillar Incorporated, has been charged with evading taxes by giving revenue to an associated corporation located in Switzerland. Caterpillar invested $55 million and executed a plan that allowed income to be transferred into an offshore account in Switzerland.

Caterpillar avoided $8 billion in taxes by violating the Economic Substance Doctrine, which states that it is illegal to make a business deal for the sole purpose of saving taxes.

Investigation into Caterpillar’s finances began when a former employee filed a civil suit accusing the corporation of not appropriately handling their finances. The investigation has elevated to the point where the U.S. Senate will be questioning Caterpillar in a hearing in the near future.

Furthermore, Caterpillar has only kept 15% of their income in the United States despite the majority of their procedures such as storage, product design, research and manufacturing being conducted in the United States.

It’s still undecided whether Caterpillar has broken any tax laws, but the case has brought the company much unwanted attention. This once well-liked Fortune 500 company has many politicians defending the company’s operations. However, many U.S. citizens believe the company’s accounting operations are immoral. This is evident in the fact that the company’s profits have decreased significantly.

Senator Carl Levin, head of the committee investigating Caterpillar, stated that the corporation is “An American success story, as well as a member of the corporate club that evades paying its taxes by shifting its profits overseas.”

Source: Wright, Sarah, “Caterpillar Inc. Evades Its Taxes,” Liberty Voice, April 2, 2014.