Top U.S. lawmaker wants corporate tax loophole 'plugged now'
By Kevin Drawbaugh
WASHINGTON, July 22 (Reuters) - Immediate government action is needed to plug a loophole that allows U.S. corporations to avoid federal taxes by shifting their tax domiciles overseas through deals known as inversions, the head of the U.S. Senate Finance Committee said on Tuesday.
Nine inversion deals have been agreed to this year by companies ranging from banana distributor Chiquita Brands International Inc to drugmaker AbbVie Inc and more are being considered. The transactions are setting a record pace since the first inversion was done 32 years ago.
Washington is increasingly concerned about the trend. "Let's work together to immediately cool down the inversion fever ... The inversion loophole needs to be plugged now," said Democratic Senator Ron Wyden, finance committee chairman, at a hearing.
Several Democrats have offered bills to curb the inversion deals, which can put foreign earnings out of the reach of the Internal Revenue Service and make other tax savings possible to boost a multinational company's bottom line. But no new law is likely as long as Republicans contend that inversion rules need to be part of a broader overhaul of the tax code, policy analysts said.
Wyden said his panel asked the chief executives of several inverted companies to testify at the hearing on international tax law problems. "None accepted our invitations," he said.
A senior official from the U.S. Treasury Department, speaking to the committee, reiterated the Obama administration's call for urgent action by Congress to implement a White House proposal to make inversions more difficult to do.
"Congress should pass legislation immediately with an effective date of May 2014 to prevent companies from effectively renouncing their citizenship to get out of paying taxes," said Robert Stack, deputy assistant secretary at the Treasury.
"We are aware of many more inversions in the works right now," he added. Continuación...