Democrats urge no U.S. contracts for corporate tax 'deserters'
By Kevin Drawbaugh
WASHINGTON, July 29 (Reuters) - Corporations that move their tax domiciles abroad would be denied federal contracts under legislation offered on Tuesday by Democrats in the U.S. Congress, targeting tax-driven deals known as inversions.
With November's congressional elections approaching, Democrats are blasting away at inversions. Few U.S. companies have done such deals, but as they become more common, they are attracting more negative publicity.
"Corporations that renounce their citizenship not only invert their business operations but pervert our laws," said Democratic Representative Lloyd Doggett of Texas.
"Those dodging their fair share of taxes should not be rewarded with taxpayer-funded government contracts," he said in a statement on the bill made with three other senior Democrats.
Dubbed the "No Federal Contracts for Corporate Deserters Act," it was unlikely to be approved soon. Congress will adjourn for the summer within days and Republicans have been saying they want inversions dealt with as part of a broad tax code overhaul.
An inversion is a deal in which a U.S. corporation buys or sets up a foreign company, then moves its tax domicile into that foreign company and its home country, while leaving core business operations in the United States. Doing such a deal ends U.S. taxation of the company's foreign profits and makes it easier for the company to take other tax-cutting steps.
Inversion deals are legal, and company executives who arrange them say they are only trying to minimize the amount of taxes the company pays, as investors expect them to do.
The Democrats' legislation would bar federal government contracts from going to businesses that incorporate overseas, that are majority-owned by the shareholders of the original U.S. corporation and that lack substantial business opportunities in the foreign country in which they are reincorporating. Continuación...