Treasury Secretary: ‘I Look Forward To Working… With Congress’ To ‘Close The Inversion Loophole’

House Republicans are “moving ahead” with discussions on corporate inversions, House Speaker Paul Ryan (R-Wis.) told reporters on Thursday. He’s not sure that a bipartisan solution will emerge, “but it shouldn’t stop us from trying.” Ryan spoke one day after Treasury Secretary Jack Lew told Congress that President Obama’s budget calls for a “complete reform of our international tax system and a specific proposal to close the inversion loophole.” Inversions allow U.S. businesses to reduce their tax bills, often by merging with a foreign company and reincorporating in lower-tax countries such as Ireland. “While inversions may be legal, it’s wrong for companies to take advantage of our infrastructure, education, our support for research, our rule of law, and then avoid paying their fair share of U.S. taxes,” Lew told the Senate Finance Committee. I look forward to working with this committee and the Congress to close the door to inversions.” Lew called business tax reform a “high priority,” but he also underscored the urgency of dealing with inversions.

“I mean, we’re seeing more and more stories of companies going overseas, large companies — we can’t wait a year to deal with this. We need to deal with this and deal with it now. And you could if you wanted to, deal with inversions on its own. I don’t think that’s ideal. We should deal with business tax reforms, but I don’t want to be leaving (Treasury) in a year, watching more companies having moved overseas, and I don’t think anyone in this committee wants to look at that either. And the answer is, you need legislation.” Lew said “there’s a lot of overlap” between congressional Republicans and the Obama administration on the issue. “We should just sit down and do it. I think people would feel better if we had a tax system where we didn’t have inversions anymore.” President Obama outlined his plan for business tax reform in his recently released Fiscal Year 2017 budget: He would lower the corporate tax rate but eliminate tax “loopholes” and subsidies; and he would establish a new minimum tax on foreign earnings, “to encourage domestic investment.”

(“Our tax system should not give companies an incentive to locate production overseas or engage in accounting games to shift profits abroad, eroding the U.S. tax base,” the budget statement said.) Republicans generally favor steeper cuts in the corporate tax rate to reduce the incentive for companies to relocate in the first place. “Look, inversions are happening by the day,” Speaker Ryan said on Thursday. “So I think we should press ahead by trying to advance solutions…I would like to think people would want to fix these international tax law problems for the sake of fixing these international tax law problems. And there should be no other reason but for that — that is necessary to get this done. “But having said that, I just don’t know if the administration will be there at the end of the day. But it shouldn’t stop us from trying. So the chairman of the Ways and Means Committee is going to keep pressing ahead on this issue.”

Lew told Congress, “I don’t think that — that any of us should feel comfortable just watching more American businesses leave the United States, be purchased by foreign companies, because we failed to — to make the effort.” Committee Chairman Sen. Orrin Hatch (R-Utah) said the best way to get companies back to the United States “is to cut the corporate tax rate so that we’re competitive.” He said it would be “very, very difficult to do,” given the current political climate in Washington. Hatch said Republicans are working on a “corporate integration program that may very well put a stop to inversions, that really, if we could go on a bipartisan basis, could make a real dent in those problems this year.”

CNS News: Treasury Secretary: ‘I Look Forward to Working…With Congress’ to ‘Close the Inversion Loophole’

Leave a Reply