Corporate tax inversion crackdown 'unavoidable' -U.S. Rep. Levin

Fri Sep 12, 2014 2:48pm EDT
 
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By Emily Stephenson

WASHINGTON, Sept 12 (Reuters) - Corporations should be on notice that government action is coming on "inversion" deals done by U.S. businesses that reincorporate abroad to cut their tax bills, said the top Democratic tax-writer in the House of Representatives on Friday.

Representative Sander Levin called cracking down on inversions "unavoidable." He said he has been told recently by Treasury Secretary Jack Lew that the Obama administration will act to make the deals less lucrative, if Congress does not.

Levin, of Michigan, said Lew met with Democrats on the tax-writing House Ways and Means Committee this week. Levin said he did not know what Treasury might do, but that it would do "more than nibble around the edges."

"Jack Lew has made it clear he prefers the Congress act, but if it does not, he will," Levin said at a Christian Science Monitor media breakfast, adding that Treasury could take steps on inversions as early as next week.

Democrats are increasingly critical of inversions, in which a U.S. business buys a foreign company, then makes its home country the new tax domicile of the combined company. The deals often cut the tax rates of the inverted company.

For instance, fast-food chain Burger King Worldwide has announced it plans to move its tax domicile to Canada as part of buying out coffee-and-donut chain Tim Hortons.

Businesses say these deals help them pay the least possible in taxes, as investors expect, and that the deals make sense because U.S. taxes are so high compared to many other countries.

In a tough election year, Democrats are decrying such deals for a lack of "economic patriotism." Lawmakers, including Levin, have floated plans to crack down on the practice.   Continued...