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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.
But Republicans favor addressing the issue as part of a broader effort to overhaul the tax code and cut the corporate tax rate. As a result, anti-inversion legislation appears unlikely to become law this year.
Levin said Democrats' proposed legislation was "serving notice" to companies that moving their tax domiciles out of the United States would be punished.
Lew has said Treasury would decide "in the very near future" what it could do to cut off the inversion trend.
Levin also warned that many conservative Republicans want policies that he said could hurt corporate interests, such as abolishing the U.S. Export-Import Bank.
The bank extends loans and loan guarantees to help U.S. businesses sell products overseas. Conservatives argue that its activities belong in the private sector and that it primarily helps big companies such as Boeing Co, but Democrats say it supports middle-class American jobs.
"Let me put it this way. I want to say to the business community, I think blind dedication to Republicans is a serious mistake," Levin said. (Reporting by Emily Stephenson; Editing by Kevin Drawbaugh and Chris Reese)