Top U.S. Senate Democrats unveil earnings stripping plan
By Emily Stephenson
WASHINGTON, Sept 10 (Reuters) - One of the main incentives driving a surge in U.S. corporations' tax-driven overseas inversion deals would be pared back under a plan unveiled on Wednesday by two top Senate Democrats.
Though the plan was seen by analysts as unlikely to become law anytime soon, it draws further attention to the rising number of U.S. businesses moving abroad for tax reasons.
Dick Durbin and Chuck Schumer, the No. 2 and No. 3 Democrats in the U.S. Senate, said their plan would deter a practice known as earnings stripping, in which companies avoid U.S. taxes by shifting U.S. profits to jurisdictions with lower tax rates.
"This bill curtails the incentive for companies to use shady accounting gimmicks to avoid paying their U.S. tax obligations," Schumer said in a statement.
The Schumer-Durbin bill came as at least nine U.S. companies were in the final stages of inversions, which involve buying a smaller foreign company in a lower-tax country and then reincorporating the combined operation there.
Schumer and Durbin said they would work with top Senate tax-writers to include their proposal in a package of reforms aimed at inversions, which they said could help push Congress toward enacting broader corporate tax legislation.
Democrats have floated a series of proposals to fight inversions, which are causing concern about erosion of the U.S. corporate tax base among Washington policymakers.
Among companies in the midst of inverting are medical device maker Medtronic Inc, fast food chain Burger King Worldwide Inc, and drug companies AbbVie Inc, Mylan Inc and Salix Pharmaceuticals Ltd. Continued...