Grassley And Baucus Step Up Pressure On Leasing Schemes

by Mike Godfrey, Tax-News.com, Washington

09 March 2004

Senior Senators on the tax-writing Finance Committee, warned colleagues last week that the continued use by local governments and corporations of leasing arrangements will cost the government many billions in tax revenues over the coming years.

According to the latest findings of Senators Chuck Grassley (R-Iowa), chairman of the Committee on Finance, and Max Baucus (D-Montana), ranking member, leasing deals cost the federal coffers $2 for every $1 that the cities and their agencies receive in fees from the promoters of such deals.

"City infrastructure items, such as transit systems, are often built with federal funds. Therefore, the US Treasury takes a double hit under leasing deals: one hit for contributing to the project construction, and another hit for federal taxes lost via such tax shelters," the Senators observed.

It has been claimed in various estimates that 'SILO', or sale in, lease out transactions, will deplete federal tax revenues by between $22 billion and $33 billion over the next ten years.

In response to this potential threat to federal tax income, Grassley and Baucus last week wrote to the heads of the Federal Aviation Administration and the Environmental Protection Agency, requesting details of any leasing schemes they may have approved. This follows a similar request to the Federal Transportation Department in November last year.

Recommended