White House Looks to Stem Corporate Tax ‘Inversions’
White House says it has no timeline for executive action on so-called corporate inversion deals in which companies are essentially renouncing their U.S. headquarters to avoid paying their fair share of taxes.
However, White House press secretary Josh Earnest said Tuesday that if Congress refuses to act, the Obama administration is looking at possible options to respond to the problem of “corporate deserters.”
Some American companies are buying foreign companies to reincorporate abroad, which the White House believes is not fair to their American competitors or the hard-working American taxpayer. The practice is legal and brings added income for not just the companies, but bankers and others involved in the structure.
The White House’s comments on inversion deals come ahead of Treasury Secretary Jacob Lew’s speech next Monday about corporate inversions deals.
Some experts suggest the administration and Treasury could slow the current pace of corporate inversion deals by counting a company’s U.S.-issued debt as equity. The change would make it harder for companies to achieve the necessary majority foreign equity ownership required for reincorporation abroad in an inversion deal.
U.S. Senator Bernie Sanders, an Independent from Vermont, has also said companies that do inversion deals should not be allowed to compete for federal contracts.
Some Republicans and former U.S. President Bill Clinton say the inversion deals are a symptom of the larger problem, which requires comprehensive tax reform to resolve, and President Barack Obama has agreed to discuss major tax reform.