Similar Stories to Treasury Secretary: Corporate ‘inversion’ Deals Hurt Us Finances, Increase Budget Deficits on Bing News

US Treasury Secretary Jacob Lew warned Monday that the surge in companies moving offshore via mergers to skirt US taxes could weaken the country’s finances. Taking aim at “inversion” deals, Lew said Congress needs to amend tax laws to eliminate takeovers of foreign companies by US firms with the primary aim of seeking an address in a cheaper tax jurisdiction. Lew said companies had touted up to $1 billion in annual tax savings by moving their address offshore, which could impact the annual budget, $3.8 trillion in the current year. “By allowing these transactions to continue, we run the risk of eroding our corporate tax base and undoing the progress we have made to reduce our budget deficits,” he said in an opinion piece in the Washington Post. Lew said Congress should not only raise the bar in the tax laws to make inversions harder, but do so retroactively, so that the law would block the tax benefits of recent multibillion-dollar takeover deals like pharmaceutical giant AbbVie’s acquisition of Dublin-based Shire Pharmaceuticals. Companies launching inversion takeovers have advertised the tax benefits of giving the target firm 20 percent of the parent, allowing the parent to relocate its head office from the United States to a low-tax haven offshore. Lew said new legislation should require that the foreign company own at least 50 percent of the US company to allow it to establish a foreign address. Lew echoed President Barack Obama’s call last week for action against inversions, accusing the companies of benefiting from US laws, universities, and security, while “technically renouncing their US citizenship.” “I don’t care if it’s legal — it’s wrong,” Obama said. Lew’s call came as the latest such proposed deal became news.

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