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A Congressional investigation would be a closely watched test of Facebook’s emerging influence inside the Beltway. The company, which opened its Washington, D.C., office in 2009, is widely regarded as one of the most Washington-savvy Internet companies. In comparison to its high-tech predecessors such as Google and Microsoft, which waited until they were in hot water to staff up on lobbyists, the company came early to the lobbying game. Facebook spent $1.35 million on lobbying last year.
A spokesman for Facebook declined to comment for this story.
The Facebook kerfuffle, combined with the massive losses at banking giant JPMorgan, has intensified the spotlight on Wall Street issues nearly two years after President Barack Obama signed Dodd-Frank into law. Democrats and Republicans are exploiting the opportunity to re-litigate the issues that divided them two summers ago.
Democrats are pointing to the recent events as reason to have more Wall Street regulation and empower the agencies charged with writing the rules to finish their work. Republicans, on the other hand, are pointing to the losses at banks such as JPMorgan as examples of how regulation is not helping, despite the fact that the rules are still largely unwritten and the GOP has been successful at siphoning off funds from the responsible agencies.
The Facebook issue has also opened up the doors to debating tax reform, an endeavor both sides love to talk about but acknowledge likely cannot be done in an election year.
Schumer and Casey’s offering was the most specific tax-related conversation proposed in response to Facebook. The two Senators’ plan would forbid any person who relinquishes citizenship for tax purposes and has in excess of $2 million of net worth from returning to the United States. The person also would face a 30 percent capital gains tax on any future American investment regardless of where he or she resides.
Republicans used the targeted proposal to launch a critique on the larger tax reform issue.
“As usual, the response from the other side of the aisle is a talking point rather than a real solution. The root cause of the problem — an archaic tax code and massive tax burden that incentivizes people to do something like this — must be fixed,” said Antonia Ferrier, spokeswoman for Senate Finance ranking member Orrin Hatch (R-Utah). “Tax reform would not only be a more effective way of discouraging people from emigrating from the United States, but would also ensure that the United States remains competitive in the global economy.”
But in the absence of major reforms, lawmakers can still zero in on specific proposals as news continues to break on the markets.
Levin, for example, touted a $16 billion tax deduction Facebook received when issuing stock options as part of its initial offering as justification for closing the stock option loophole.
Janie Lorber contributed to this report.