Two US senators have announced that they will move to tighten tax laws that discourage corporate inversions, while a third believes that US tax reform is key to preventing inversions.
Sen. Ron Wyden, D-Ore., in a May 8 Wall Street Journal editorial, said that as part of comprehensive tax reform, he would require more foreign ownership following an inversion before a US company can escape worldwide US taxation. “Current law requires that US companies reincorporating overseas must ensure that at least 20% of their stock is owned by their new, foreign partner. As chairman of the Senate Finance Committee, I am committed to raising this floor to at least 50% for all inversions taking place from May 8, 2014,” Wyden said.
In a May 8 Press Release US Senator Carl Levin, D-Mich., said that he is working with colleagues to introduce corporate inversion legislation. “I’ve long been concerned about inversions – companies moving offshore on paper, for tax purposes, while the management and operations remain in the United States,” said Levin.
Sen. Orrin Hatch, R-Utah, offered a different solution. “Instead of imposing arbitrary inversion restrictions on companies retroactively and thereby further complicating the goal of comprehensive tax reform, we should first keep our focus on where we can agree. By uniting around the goal to create an internationally competitive tax code, we can keep American job-creators from looking to leave in the first place,” said Hatch in May 9 speech on the Senate floor.
The announcements follow news of New York-based, Pfizer Inc.’s attempts to take over British pharmaceutical, AstraZeneca. The combined company would be owned by a new UK parent, reducing Pfizer’s US taxes, but Pfizer would keep its offices in New York.
