U.S. Democrats to target companies moving overseas to dodge taxes
By Kevin Drawbaugh
WASHINGTON (Reuters) - Corporate tax-dodging deals known as inversions, in which a U.S. multinational shifts its tax domicile to a lower-tax country, would be restricted under legislation to be proposed in both houses of Congress by Democrats on Tuesday.
Representative Sander Levin and Senator Carl Levin, brothers from Michigan, will both propose bills, aides said.
Public hearings may follow, shining a light on the increasingly popular inversion strategy. But analysts said it was unlikely that legislation could win approval anytime soon with Congress deadlocked over fiscal policy.
"A fresh wave of deals could increase chances that a bill could move. But for now odds of enactment are well below 50 percent," said Greg Valliere, chief political strategist at the independent Potomac Research Group.
The Levin proposal could face opposition in the Republican-led House of Representatives, although Dave Camp, chairman of the tax-writing House Ways and Means Committee, has put forward proposals to end inversions.
"It is a real problem when the tax code provides an incentive for U.S-based companies to move overseas, often times taking good jobs with them," Camp said last month.
Two major inversion deals were launched recently. Both have stumbled. One was a possible combination of U.S. advertising firm Omnicom Group Inc (OMC.N: Quote) with French rival Publicis Groupe SA (PUBP.PA: Quote). That deal collapsed.
The other was U.S. drugmaker Pfizer Inc's (PFE.N: Quote) pursuit of UK competitor AstraZeneca Plc (AZN.L: Quote). That deal was thrown into doubt on Monday when AstraZeneca rejected Pfizer's latest offer. Continued...