The Senate's Subcommittee on Investigations held a hearing on how foreign investors dodge taxes on U.S. stock dividends with the help of U.S. banks and investment houses.

"The focus today is not on U.S. citizens, but on non-U.S. persons who are supposed to be paying taxes on the dividends they receive from U.S. corporations, but don't," said committee chair Carl Levin (pictured), D-Mich. "They don't pay those taxes, because major financial institutions like Lehman Brothers, Morgan Stanley, Deutsche Bank, UBS, Merrill Lynch, Citigroup and others have created financial gimmicks whose primary purpose is to enable clients to dodge U.S. taxes owed on U.S. stock dividends, but which are dressed up with phrases like 'dividend enhancement,' 'yield enhancement' and even 'dividend uplift.' Using stock swaps, stock loans and exotic financial instruments, the financial institutions have built a series of financial black boxes, surrounded by mind-numbing complexity, designed to keep their clients' money tax-free."

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