Treasury to limit profitability of overseas shifts
WASHINGTON (AP) — Treasury Secretary Jacob Lew said Monday the Obama administration will decide "in the very near future" what actions it can take to make it less profitable for U.S. companies to shift their legal addresses to other countries.
A growing number of U.S. companies are shifting their addresses abroad in an effort to reduce their U.S. taxes. The maneuver is known as a corporate inversion.
In a speech Monday morning, Lew said these companies are eroding the U.S. tax base and shifting the burden of funding the government to other taxpayers. He said the best way to address the issue is for Congress to overhaul the U.S. tax code making it more attractive for companies to stay in the U.S.
With tax reform facing an uncertain future in Congress, Lew pressed lawmakers to pass legislation making it harder for U.S. companies to pull off corporate inversions.
"Still, the administration is clear-eyed about the possibility that Congress may not move as quickly as necessary to respond to the growing wave of inversions," Lew said in prepared remarks. "Given that, the Treasury Department is completing an evaluation of what we can do to make these deals less economically appealing, and we plan to make a decision in the very near future."
Lew added: "Any action we take will have a strong legal and policy basis, but will not be a substitute for meaningful legislation — it can only address part of the economics. Only a change in the law can shut the door, and only tax reform can solve the problems in our tax code that leads to inversions."
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