Reality Check: Franken's Ad On McFadden's 'Tax Inversion'
MINNEAPOLIS (WCCO) -- A tough new ad from Democratic Sen. Al Franken accuses his Republican opponent's business of avoiding taxes by headquartering overseas.
But Republican Mike McFadden calls the ad "ridiculous" and "full of lies."
The ad marks a new Franken campaign strategy: directly attack McFadden for his business dealings.
"Bermuda," the ad's narrator said. "Known for its beauty, its pink beaches, and for businesses trying to avoid paying taxes. Meet investment banker Mike McFadden."
Franken links McFadden's investment company -- Lazard Middle Market -- with the parent company Lazard Limited, which is headquartered offshore.
"McFadden's business is based right here in Bermuda. That's right. McFadden's company uses a special tax loophole to list its headquarters offshore -- and avoid paying millions in taxes in America," said the ad's narrator.
It is true that McFadden's parent firm Lazard moved its headquarters to Bermuda in 2005 to avoid U.S. corporate taxes, which are among the highest in the world.
It's called a "tax inversion," where companies head overseas to find a friendly tax climate.
The number of companies seeking tax inversions is growing. This year, Minnesota-based Medtronic moved its headquarters to low-tax Ireland.
But the ad may overstate McFadden's Bermuda connection when it says that his business is based in Bermuda.
McFadden joined Lazard in 2007, two years after it moved to Bermuda.
The Lazard Middle Market office he led is headquartered in Delaware. Nevertheless, it's fully a part of the parent company in Bermuda.
And while he says he's opposed to tax inversions, McFadden made a fortune with one of the first American companies to do it.
Tom Erickson, a spokesman for the McFadden for Senate campaign, released this statement:
"This is nothing but a desperate attempt by Democrats to turn attention away from the failed Obama-Franken foreign policy agenda that is creating chaos around the globe.
By refusing to reform the tax code, Al Franken and President Obama are encouraging companies to move their headquarters overseas.
We need leaders in Washington with business experience who can get our economy back on track and who will reform our tax code by lowering rates and eliminating special interest loopholes so we can encourage investment here in America, not abroad."
From the Franken for Senate campaign, here is a statement from spokeswoman Alexandra Fetissoff:
"Investment banker Mike McFadden says his business record is a reason Minnesotans should vote for him.
But what he doesn't want voters to know is that his company is dodging millions in U.S. taxes by exploiting an offshore tax haven."
