WASHINGTON (Reuters) - U.S. medical device maker Medtronic’s plan to buy rival Covidien and move its base to Ireland is a sign that something is wrong with the U.S. tax system, a top Obama administration official said on Tuesday.
The planned $42.9 billion acquisition is the latest so-called inversion deal to stir controversy in Washington. Under these transactions, a company buys a foreign firm and reincorporates in another country to take advantage of lower tax rates there.
Deputy Treasury Secretary Sarah Bloom Raskin said the Medtronic deal should put pressure on Congress and the administration to overhaul tax laws.
“This is a signal that some kind of business tax reform should be taken quite seriously,” she told a business forum. “Something is probably wrong with our tax system.”
The administration and many lawmakers support reducing the top U.S. corporate tax rate. But reform efforts in both the Republican-controlled House of Representatives and the Democrat-controlled Senate stalled this year amid deep disagreement over tax and spending priorities.
Reporting by Jason Lange; Editing by Ken Wills