WASHINGTON The U.S. Senate's chief tax law writer on Tuesday vowed to work on overhauling the federal tax code by August 2015, citing a move by Medtronic Inc to shift its tax home base to Ireland as a spur to congressional action.
Senator Ron Wyden, the chairman of the Senate Finance Committee, said he wants to cut the corporate income tax rate to 24 percent from 35 percent, chiefly by eliminating loopholes. Wyden has advocated this proposal for years. Multinational companies have been clamoring for a tax cut.
The Oregon Democrat said there will be an opening for tax reform between now and Congress' August 2015 break. After that, lawmakers will be consumed by 2016 presidential election-campaign politics, he said.
"There is a prime 15-month window from now until the August recess of 2015," he said at a Wall Street Journal conference.
"We do need to go after some of these loopholes," Wyden said. "You go in there, clean those out, and use the money to hold down the rates."
Wyden is one of the few lawmakers in the U.S. Congress to have a comprehensive plan for rewriting the tax code. He first offered it as legislation in 2010. Congress has not thoroughly recrafted the loophole-riddled tax code since 1986.
Republican Senator Dan Coats has worked closely with Wyden. A spokeswoman for Coats told Reuters he "is in discussions with Senator Wyden about updating and improving their proposal."
Tax 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 policies.
Efforts to rewrite the tax code may not gain traction next year, either, said Representative Chris Van Hollen, the top Democrat on the House Budget Committee.
"Possibility next year? I don’t rank the possibility that high," Van Hollen told reporters at an event.
But some lawmakers have refocused on this daunting project because of a flurry of deals by major U.S. multinationals to move their tax domiciles offshore.
Medical device maker Medtronic announced it has agreed to buy Dublin-based Covidien Plc for $42.9 billion. As part of the deal, known as an "inversion," Medtronic would shift its tax home base to Ireland from Minnesota.
Representative Sander Levin, the top Democrat on the House of Representatives tax committee, said he met on Tuesday with officials of both companies.
"Congress owes it to the American people to inquire seriously into each and every acquisition, given the dramatic increase in the number of corporate inversions in recent years, while Congress undertakes ... tax reform on a truly bipartisan basis,” Levin said in a statement.
The Medtronic-Covidien transaction was the latest in a batch of proposed inversion deals. Two earlier ones, pursued by U.S. drugmaker Pfizer Inc and advertising company Omnicom Group Inc, failed for non-tax-related reasons.
(Additional reporting by Emily Stephenson; Editing by Kevin Drawbaugh, Jan Paschal and Eric Walsh)