SENATORS EXPAND LEASING TAX SHELTERS PROBE: Federal agencies may have played a role in approving abusive tax shelter leases using federally funded infrastructure assets, according to Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, and ranking member Sen. Max Baucus, D-Mont.The senators have been investigating how major U.S. companies receive huge tax deductions by pretending to lease the infrastructure of cities and foreign countries, and then pretending to lease them back.
Under this scheme, according to Grassley and Baucus, municipalities are paid an up-front cash fee to enter into a long-term lease of their infrastructure to the tax shelter promoters. The cash received by the municipality, however, pales in comparison to the federal tax benefits received by the corporations, which then are able to depreciate taxpayer-funded bridges, subways and rail systems as a result of the lease.
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