Senators eye bill to halt corporate tax 'inversion'

WASHINGTON Fri May 9, 2014 7:20am EDT

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WASHINGTON (Reuters) - Democratic senators on Thursday said they are considering legislation to prevent corporate inversions, an increasingly-popular transaction that involves U.S. companies reincorporating overseas to avoid U.S. taxes.

Senator Finance Committee chairman Ron Wyden, a Democrat, said he wants to make it harder for U.S. companies to move their headquarters abroad to lower their taxes for inversion deals that take place on or after May 8, 2014.

"I don't approach retroactivity in legislation lightly, but corporations must understand that they won't profit from abandoning the U.S.," Wyden said in a Wall Street Journal editorial posted online late Thursday.

Wyden said he wants to increase to 50 percent from 20 percent the amount of stock a foreign company must own in a U.S. company for an inversion deal to legally take place.

Additionally, Wyden called for comprehensive tax reform as a way to make the U.S. more business friendly.

"I'm committed to making this happen and including changes in the inversion rules as part of a tax overhaul," Wyden said.

Earlier on Thursday, Democratic Senator Carl Levin, a long-time advocate for closing corporate tax loopholes, said he is also talking with senators about potential legislation.

"It's become increasingly clear that a loophole in our tax laws allowing these inversions threatens to devastate federal tax receipts. We have to close that loophole," said Levin in a statement.

Levin is the chairman of the Senate Permanent Subcommittee on Investigations, which has held hearings to shed light on U.S. companies' legal efforts to avoid U.S. taxes.

A recent bid from drug-maker Pfizer Inc to acquire AstraZeneca Plc, renewed attention on corporate inversions. The potential deal would allow U.S.-based Pfizer to re-domicile in Britain to take advantage of a significantly lower corporate tax rate there.

In April, days after the potential Pfizer deal was made public, the Obama administration said it was seeking ways to curb inversions.

(Reporting by Patrick Temple-West; Editing by Chris Reese and Tom Brown)

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Comments (12)
carnivalchaos wrote:
This will be opposed by the Republicans in exchange for campaign contributions from companies benefiting from moving their corporate headquarters overseas. The Republicans would sell our original copies of the Declaration of Independence if it meant more cash in their campaign coffers.

May 08, 2014 11:39pm EDT  --  Report as abuse
Instead of focusing on the tax inversion, focus on modifying the tax code in the US to eliminate the reasons or excuses for the inversion. The US corporate and personal tax codes are antiquated and need a drastic overhaul for simplicity and tax rates.

May 09, 2014 5:31am EDT  --  Report as abuse
ready2013 wrote:
how many times have I heard the libs and dems use the European community as an example that the US should live up to. Maybe the tax code should be changed to encourage (not coerce) businesses to stay or move into the US. is there any wonder why corporations would want to move away from the dems?

May 09, 2014 6:23am EDT  --  Report as abuse
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