Scorekeeper increases estimate of offshore tax bill
Legislation seeking to stop U.S. corporations from moving their legal address abroad to avoid paying U.S. tax rates would raise significantly more revenue than originally thought, according to the official congressional scorekeeper.
The Joint Committee on Taxation now says that Democratic legislation to curb inversions would raise $33.6 billion over a decade — far higher than the $19.6 billion the committee projected earlier this year.
Tom Barthold, the tax committee’s chief of staff, said the committee’s previous estimate “did not properly reflect the appetite of some U.S. corporations for inversions.”
The Democratic proposal from Rep. Sandy Levin (D-Mich.) would essentially make it impossible for a U.S. company to buy a smaller foreign competitor, and then place its headquarters abroad. Those sorts of moves can allow corporations to slash their tax bill.
Lawmakers revived their interest in inversions this year after Pfizer sought to take over the British drug maker AstraZeneca. Burger King’s merger with the Canadian doughnut chain Tim Hortons is perhaps the most prominent cross-border merger in recent months, but some analysts have dismissed the idea that deal was done mostly for tax reasons.Still, the Burger King deal is one reason that Democrats have said they’re skeptical of Antonio Weiss, who worked on that merger and has been tapped by President Obama for a senior Treasury Department position.
Republicans have said they’re not fans of the Democratic legislation, and that the offshore tax deals should be addressed through an overhaul of the tax code. The Treasury Department rolled out rules in September that seek to limit the economic benefits of inversions, after Congress deadlocked over how to proceed.
“Corporate inversions remain a serious problem that must be immediately addressed through legislation. Action cannot wait for tax reform,” Levin said in a statement on Wednesday. “The Treasury Department’s proposed rules are an important step toward stemming the tide of inversions, but the new estimates make clear that immediate legislative action is necessary.”
