Senator Carl Levin, (D-Mich.) is sponsoring a bill (S. 506, Stop Tax Haven Abuse Act) which, according to Levin, "targets offshore tax abuses that rob the U.S. Treasury of an estimated $100 billion each year, rewards tax dodgers using offshore secrecy laws to hide money from Uncle Sam and offloads the tax burden onto the backs of mid-rndle income families who play by the rules." A follow up to a 2007 bill, this legislation contains a new section that would be especially impactful.rnSection 103 of S.506 would reclas-sify as a U.S corporation any foreign corporation that meets two tests: 1) its stock is regularly traded on an established market or its aggregate gross assets under management are at least $50 million, and 2) the corporation is managed in the United States.rnReclassified offshore funds would be subject under the Internal Revenue code to corporate income taxation, and presumably, state and local income taxation as well, where applicable. Since offshore funds are formed on the premise that the fund itself will not be subject to corporate income tax, S.506 would effectively terminate the ability of U.S. investment managers to compete in the offshore fund market.
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