Treasury seeks ways to block tax inversions 

The Treasury Department is exploring ways to unilaterally block a surge of U.S. companies shifting their headquarters overseas in search of major tax savings.

The new escalation of the White House battle against corporate tax inversions came as a key congressional. Democrat circulated a draft of potential legislation that could make it more difficult for U.S. companies to re-incorporate overseas.

Treasury action takes aim at a trend that has seen 47 U.S. companies move their tax-reporting address abroad during the last decade. Roughly 12 more are pursuing or researching potential shifts.

Republican leaders contend that the best way to keep U.S. firms from leaving is an overhaul of the U.S. tax code that includes a reduction of the 35% top tax rate on businesses.

This raises the possibility of legislation that would make it harder for U.S. firms to re-incorporate in lower-tax nations. To tap overseas earnings of foreign corporations, the firm control is required to pay U.S. taxes on the funds.

Congressman Levin has asked the staff to look at various alternatives to address a variety of tax loopholes, including corporate inversions and other tax avoidance strategies, spokesman Josh Drobnyk said Tuesday.

“Time is of the essence,” Treasury Secretary Jacob Lew told The New York Times in an interview Tuesday. “We are looking at a very long list of possible ways to address the issue.”

President Obama has criticized the exodus, contending the departing firms are “gaming the system” while eroding federal tax collections and forcing other American taxpayers to make up the shortfall.

 

Source: Usatoday

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