Tags: GOP | treasury | inversion | rules | impact | businesses

GOP: Inversion Rules Will Have 'Detrimental Impact' on Businesses

Image: GOP: Inversion Rules Will Have 'Detrimental Impact' on Businesses
House Ways and Means Committee Chairman Kevin Brady (Getty Images)

By    |   Tuesday, 28 Jun 2016 02:07 PM

Republicans advised the Treasury Department against moving forward with proposed rules for preventing businesses from moving their headquarters overseas for tax purposes, saying it would harm companies that aren't engaged in that strategy.

GOP legislators asked the Treasury Department to move the implementation deadline back from July 7 and allow more time for public comment. Republican members of the House Ways and Means Committee sent a joint letter to the department, saying:

"We believe any finalization of the proposed regulations in present form will have a profound and detrimental impact on business operations nationwide," the Washington Examiner reports.

The legislation aims to stop multinational firms from reducing the federal taxes they owe on their American units by having those subsidiaries take on debt owed to their overseas corporate parents in order to reduce taxable U.S. earnings.

Rep. Sander Levin of Michigan defended the measure, telling the Examiner that this practice, called earnings-stripping, allows corporations "to significantly lower the amount of taxes they pay in the U.S, while taking advantage of our country's resources and strong workforce. While Republicans sit on their hands, House Democrats will continue to take actions to aggressively limit tax-motivated inversions."

But the new rules would also apply to intra-company transfers that are entirely within the U.S., punishing many for routine cash-management practices, The Wall Street Journal pointed out in a recent editorial.

It cited Caterpillar chief executive Doug Oberhelman as calling the proposed rule "very onerous" and one that threatens to put U.S. companies at a "distinct disadvantage" to foreign competitors.

GOP representatives claim the rule would lead to "unacceptably high levels of uncertainty and adverse collateral consequences for non-tax motivated business activity," and that many U.S. firms would be affected, even those who aren't engaged in earnings-stripping.

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Republicans advised the Treasury Department against moving forward with proposed rules for preventing businesses from moving their headquarters overseas for tax purposes, saying it would harm companies that aren't engaged in that strategy.
GOP, treasury, inversion, rules, impact, businesses
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2016-07-28
Tuesday, 28 Jun 2016 02:07 PM
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