WASHINGTON, June 17 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
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. 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 Inc 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.
The 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.
Both deals, like Medtronic's, would have resulted in smaller
foreign rivals being acquired by major U.S. corporations so they
could restructure and move their tax domiciles to countries with
lower tax rates. The main attraction of this is to move foreign
profits out from under the U.S. tax code, allowing a U.S.
multinational to reduce its overall global tax burden.
The inversion strategy is rare, but is becoming more common.
About half of the 50 or so deals done in the past 25 years have
occurred just since the 2008-2009 financial crisis ended.
(Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh
and Jan Paschal)