Treasury Secretary urges Congress to end inversions

Treasury Secretary urges Congress to end inversions

Treasury Secretary Jacob Lew sent letters to the top lawmakers on the House Ways and Means Committee and the Senate Finance Committee on July 15, in an attempt to effect action on the issue of corporate tax inversions, according to The New York Times. Inversions are the controversial – but popular – practice of merging with a foreign company in order to take advantage of a lower tax rate abroad.

Despite Lew’s entreaties, the recent wave of inversions seems unlikely to slow down, with Congress unwilling or unable to make laws on the matter and Wall Street financial advisors continuing to encourage the practice, the news source reported. Two particularly large inversions appeared all but stamped and signed this week. Chicago-based drug maker AbbVie won tentative approval to acquire Ireland-based Shire for $53 billion, and Mylan, another U.S. drug maker, paid $5.3 billion for the European assets of Abbott Laboratories.

“What we need as a nation is a new sense of economic patriotism, where we all rise or fall together,” Lew wrote, according to the LA Times. “We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes.”

Lew went on to explain that the U.S. multinational corporations that are undergoing inversions continue to benefit from their business locations in the United States, the U.S. protection of intellectual property rights, support for research and development, infrastructure and investment climate, all of which is funded by taxpayer dollars, the news source wrote. Chris Krueger, a senior analyst at Guggenheim Partners explained that no real consensus exists among Democrats on the topic of inversions, and that the Republican consensus is against acting on the practice outside of the context of broader corporate tax reform.

With only 24 legislative days before the November elections, it is highly unlikely that Congress will act on the issue in the near future.

Tax inversion is a hot-topic as more and more US companies try this strategy to avoid income tax. Find out more about this topic here:

• New Congressional Report Highlights Tax Inversions

• Medtronic the Latest Company to Propose Tax Inversion

• Senators Consider Closing Tax Inversion Loophole

• Walgreens Urged to Undergo Tax “Inversion”

• U.S. Corporate Tax Outlook Fueling Inversion Deals

• International Tax Trends

• Report Shows How Much Walgreens Stands To Gain with Inversion

• Levin: Bill Limiting Corporate Inversions Later This Week

• Possible Pfizer Inversion Raises Questions Among Lawmakers

• IRS Chief: U.S. Can’t End Corporate inversions