’Tax Reform’ Cry Hampers Effort to Curb Inversions
Republicans and business allies such as House Ways and Means Chairman Dave Camp and the U.S. Chamber of Commerce say they know the way to stop companies from changing addresses to cut their tax bills: Reform the tax code.
Yet that call for the first major revision of the U.S. tax system in three decades hasn’t translated into action and won’t anytime soon. There’s no consensus on what changes would prevent companies from fleeing the system. And the inertia in Washington is opening the way to further deals, known as inversions.
“The people who are arguing that this needs to be done in the context of corporate tax reform are basically arguing that we shouldn’t stop it,” said Kimberly Clausing, an economics professor at Reed College in Portland, Oregon, who studies international taxation.
Lawmakers of both parties lament the trend that’s leading companies such as Medtronic Inc. and Mylan Inc. to move their tax homes outside the U.S. President Barack Obama has labeled the practice an “unpatriotic tax loophole.”
“There’s still going to be a lot of warm island countries around the world” without corporate taxes no matter how low the U.S. rate goes, Jason Furman, a top economic adviser to Obama, said during a joint appearance with Camp on Sept. 10 at the Business Roundtable in Washington.
Source: Bloomberg
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