WASHINGTON, D.C. -- Caterpillar executives defended their tax strategy in Washington on Tuesday.
It is a strategy that, according to Senator Carl Levin, allowed Caterpillar to avoid paying $2.4 billion in income taxes.
But the company said it is paying everything it owes.
It was a contentious and lengthy hearing, as Senator Carl Levin took on Caterpillar, specifically the company's off-shore tax policy.
"The tax savings are $300 million a year," said Levin.
In 1999, Caterpillar transferred the rights to profits from its parts business to a wholly-controlled Swiss affiliate.
They are taxed at a very low rate.
It's a policy that's entirely legal, which doesn't make it right, according to the Democrat from Michigan.
"It's long past time to stop off-shore profit shifting," Levin said.
Caterpillar's Vice President Julie Lagacy defended the strategy, saying, "Americans pay their income taxes and no more."
As did representatives of Price Waterhouse Coopers who came up with the plan.
Republicans backed Caterpillar. Senator John McCain pointed out the Internal Revenue Service (IRS) had looked at the strategy years ago and made no arrests.
Congressman Aaron Schock suggested Levin look to his own state.
"General Motors took its effect tax rate from 35-percent to zero using the same tax code," Schock said.
Senator Rand Paul suggested Caterpillar ought to be rewarded for minimizing their costs.
Levin's subcommittee has looked at Apple, Microsoft and Hewlett-Packard as well as Caterpillar, perhaps trying to build support for his legislation to put restrictions on U.S. Corporations overseas profits, a bill which is stalled in the Senate.
The Senate hearing did not seem to have a negative affect on Wall Street. Caterpillar stock was up half a point to 99.81 on Tuesday.