US Democrats focus on tackling corporate inversion

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As Republicans and Democrats work out their disagreements over tax rate reform and an Innovation Box, Democrats have again set their immediate focus on combatting corporate tax inversions.

They see tax inversions are a big problem, companies changing their address to lower the taxes they pay in the U.S. is costing us tens of billions of dollars

Last week, Senators Chuck Schumer (D-NY) and Sherrod Brown (D-OH) introduced a new set of bills targeting inversions.

Senator Brown’s bill, S. 2662, Pay What You Owe Before You Go Act, would require inverting corporations to pay U.S. tax on all deferred overseas profits before reincorporating in a new country, while Senator Schumer’s bill, S. 2666, Corporate Inverters Earnings Stripping Reform Act, seeks to limit inverted companies earnings stripping abilities.

Republicans, however, seize upon the wave of inversions as proof that corporate taxes in the United States are too high. They argue that the corporate code should be reformed by slashing rates, and then inversions will end.

So, despite this new round of bills, it is unlikely that Republicans will address inversions through standalone legislation and will instead continue to focus on tax reform as the solution.

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