4 Min Read
WASHINGTON, Sept 16 (Reuters) - The U.S. Senate's top Democratic tax-writer said on Tuesday he is considering linking legislation to curb foreign corporate buyout deals known as inversions with separate efforts to renew expired tax breaks that businesses want extended.
Democratic Senator Ron Wyden, who leads the tax-writing Finance Committee, said several lawmakers told him they want to pair inversion legislation with the so-called tax extenders package to be dealt with when lawmakers return to Washington after the November midterm elections.
In an inversion, a U.S. business buys a foreign company, then moves its tax domicile to the foreign entity's home country.
Democrats want to crack down on the deals, which they say unfairly erode the U.S. corporate tax base.
Wyden and Senator Orrin Hatch, the committee's top Republican, have been working on crafting legislation. But they have not released details of what they are considering.
Business groups are lobbying against inversion legislation and say the deals make sense because U.S. taxes are high compared with many other countries. But businesses also want lawmakers to approve the "extenders" package, which would renew 50 temporary tax breaks worth about $85 billion.
"Senator Hatch and I are looking at all the steps necessary to making sure that Democrats and Republicans together can stop this parade of inversions as part of an extenders bill during the lame duck session," Wyden said, adding that he was open to other ways to passing inversion legislation.
Several companies are pursuing inversions. Fast-food chain Burger King Worldwide announced in August plans to move its tax domicile to Canada as part of buying coffee-and-donut chain Tim Hortons, for instance.
Republicans have said they would prefer to address inversions through a broader tax overhaul that lowers corporate tax rates.
"Senator Hatch strongly believes that the only real solution to this challenge is comprehensive tax reform," said Julia Lawless, a spokeswoman for Hatch. She said bipartisan discussions continued about a possible stopgap inversion bill.
Wyden said he had heard from some conservatives that they think the recent wave of inversions hurts Congress' ability to revamp the tax code because it shrinks the corporate base.
Senate Republican leader Mitch McConnell said on Tuesday the issue would likely be settled after the midterm elections.
"I think we have to get to the lame duck before we decide what's possible," McConnell told reporters.
Treasury Secretary Jack Lew has said his department is considering what it can do to stem the flow of inversion deals.
A Treasury representative on Tuesday referred questions to remarks made by Lew on Sept. 8 in which he said "the Treasury Department is completing an evaluation of what we can do to make these deals less economically appealing, and we plan to make a decision in the very near future."
Senate Majority Leader Harry Reid said he wanted to see what the Obama administration would do before deciding whether Congress should act. (Additional reporting by Richard Cowan in Washington; editing by Kevin Drawbaugh and Matthew Lewis)