Tags: inversion | Senate | Levin | Obama

Senate's Levin Seeks Fresh Limits on Corporate Inversion Deals

Tuesday, 20 May 2014 11:17 AM

U.S. companies would face strict limits on mergers in which they move their tax address outside the U.S. under a bill proposed today by Senator Carl Levin, a Michigan Democrat.

Under Levin’s plan, U.S. companies trying to buy a foreign company and relocate their headquarters for tax purposes must ensure that shareholders of the non-U.S. company own at least 50 percent of the combined company, up from 20 percent now.

The proposal would consider inverted companies to be domestic for U.S. tax purposes if managers remain in the U.S. and if either 25 percent of sales, employees or assets remain in the U.S. The bill would be retroactive and remain in place for two years while Congress considers broader tax-code changes.

“The Treasury is bleeding red ink and we can’t wait for comprehensive tax reform to stop the bleeding,” Levin said in a statement.

Levin is responding to 14 companies that have conducted mergers since 2011 in which they moved headquarters outside the U.S. and into a lower-tax jurisdiction. Other companies, including Pfizer Inc. with its proposed purchase of AstraZeneca Plc, have contemplated such transactions.

The Pfizer offer put inversion deals in the spotlight and spurred Levin and other lawmakers to search for a way to prevent the erosion of the U.S. corporate tax base.

Little Chance

Levin’s bill, co-sponsored by 13 other Senate Democrats, stands little chance of becoming law. Republicans say any changes must be considered only as part of a broader revamp of the tax code.

Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, said he wants to limit inversions as part of a plan that would lower the U.S. corporate tax rate, which at 35 percent is the industrialized world’s highest.

The changes on inversions, Wyden said, should be retroactive to May 8, which he said should give companies a signal to stop such deals.

“With respect to this inversion matter we ought to in effect freeze the linebackers, as sometimes it’s described in tax lingo,” Wyden said on Bloomberg Television May 15.

Levin’s bill mirrors a proposal from President Barack Obama, which would increase tax collections by $17 billion over the next decade.

Levin, 79, is chairman of the Senate’s Permanent Subcommittee on Investigations and has released reports on offshore tax avoidance by companies such as Apple Inc., Microsoft Corp. and Caterpillar Inc. He isn’t seeking re-election this year.

Representative Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee, plans to introduce a similar bill. He is Carl Levin’s brother.

© Copyright 2017 Bloomberg News. All rights reserved.

 
1Like our page
2Share
InvestingAnalysis
U.S. companies would face strict limits on mergers in which they move their tax address outside the U.S. under a bill proposed today by Senator Carl Levin, a Michigan Democrat.
inversion, Senate, Levin, Obama
421
2014-17-20
Tuesday, 20 May 2014 11:17 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved