Most U.S. politicians agree that the tax code should be dramatically revamped, but little has been done so far to accomplish this goal. In an attempt to spur reform, Rep. Sandy Levin, D-Michigan, published a report examining the corporate practice of shifting headquarters overseas in order to dodge U.S. taxes, according to The Hill. Known as a “tax inversion,” the technique has become extremely popular in recent years.
In total, 76 U.S. companies have moved their tax residences to overseas low-tax addresses since 1983, according to the policy research arm of Congress,The Irish Times reported. Despite the popular belief that small island countries like Bermuda and the Cayman Islands are the most used for tax-dodging, the most frequently used domiciles are Ireland, the UK, the Netherlands and Switzerland.
Rep. Levin, who is a ranking member of the House of Representatives Ways and Means Committee, introduced legislation in May that would limit corporations’ abilities to conduct inversions, according to the news source. His brother, Sen. Carl Levin, introduced similar legislation in the Senate and questioned Apple on its use of Irish companies to reduce its tax liabilities at a Congressional hearing last year. Neither measure seems likely to become law before the November elections that will decide which party controls the two sections of the U.S. legislative branch.
“Barely a week seems to pass without news that another corporation plans to move its address overseas simply to avoid paying its future share of U.S. taxes,” Congressman Levin said in a statement. “These corporate inversions are costing the U.S. billions of dollars and undermining vital domestic interests. We can and should address this problem immediately through legislation to tighten rules to limit the ability of corporations to simply change their address and ship U.S. tax dollars overseas.”
Both Frank Brunetti and I have written extensively about tax inversion in the U.S., to find out more about this hot button issue check out the last featured posts on the subject:
Medtronic the Latest Company to Propose Tax Inversion
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