Congress told to act fast on offshore tax deals
The Obama administration called for immediate congressional action to stop U.S. companies from using cross-border mergers to escape the country's tax system, the latest trend in corporate deal-making.
In a letter calling for a “new sense of economic patriotism,” Treasury Secretary Jacob J. Lew said Congress should pass tax changes retroactive to May.
Senate Majority Leader Harry Reid on Wednesday said he wants to advance legislation proposed by Sen. Carl Levin of Michigan and that it's taken too long. White House Press Secretary Josh Earnest said President Obama will discuss the issue more in the weeks ahead.
“We should prevent companies from effectively renouncing their citizenship to get out of paying taxes,” Lew wrote in the letter to top congressional tax writers, which was dated Tuesday. “We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes.”
The mergers used to legally avoid taxes, known as inversion transactions, have become increasingly popular during the past year, particularly in the pharmaceutical industry. Companies including Minneapolis-based Medtronic Inc. and Canonsburg-based Mylan Inc. have announced plans to move their legal addresses outside the United States.
Pfizer Inc., based in New York, attempted to move its tax address to the U.K. by purchasing London-based AstraZeneca Plc.
Rep. Rosa DeLauro, a Connecticut Democrat, persuaded the House to adopt an amendment last week barring companies that moved their legal address to Bermuda or the Cayman Islands from getting some federal contracts.
The amendment would apply to only a few companies, and DeLauro said she'll expand her proposal to affect all companies that move their address overseas to avoid taxes.
“It is all about tax dodging and being a tax cheat,” she said.
Still, Lew's letter and the Democrats' actions may not be enough to prompt Congress to move quickly.
Three Senate Finance Committee Republicans — Orrin Hatch of Utah, Mike Crapo of Idaho and Rob Portman of Ohio — said they had no interest in moving stand-alone legislation to stop inversions.
“I would be very disappointed if the administration believes the answer to dealing with companies going offshore is to make it harder to be an American company,” Portman said, adding that the proposal would encourage companies in other countries to buy U.S. businesses and push jobs overseas. “We need tax reform.”
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Shell shovels millions into proposed Beaver County plant site
- Muni bond funds stressed
- Off-duty but on call: Suits seek overtime
- $2-per-gallon gas expected by year’s end, but not in Western Pa.
- Companies hand out perks, benefits instead of pay raises
- Post-Gazette offers voluntary buyouts in bid to avoid layoffs
- Extended oil slump takes toll
- When it comes to home ownership, Hispanics finding locked doors
- Small business hangs on fate of Export-Import Bank
- Of Caitlyn Jenner and workplace restrooms
- Tech Q&A: Why you should test your router