Offshore tax deals on the rise, says top Dem

U.S. corporations increasingly have sought to move their legal addresses abroad in recent years, with 42 moving offshore since 2008, according to new data released by a top House Democrat.

{mosads}In all, 75 corporations have moved to a foreign country over the last two decades, according to numbers from the Congressional Research Service released by Rep. Sandy Levin (D-Mich.). That tactic, known as inversion, can allow companies to drastically slash their tax bills.

According to the data, one corporation moved abroad in 1983 — with the next U.S. inversion not occurring until 1994.

Congressional Democrats have stepped up their efforts to battle inversions in recent months, spurred on by the drug giant Pfizer’s ultimately unsuccessful attempt to merge with AstraZeneca, a British pharmaceutical company.

Walgreens, the pharmacy chain, and Medtronic, a medical device maker, have openly discussed leaving the U.S. in recent weeks. Tim Hortons, the coffee and doughnut chain, and the underwear maker Fruit of the Loom are among the 75 corporations that went through with an inversion since 1994.

Levin, the top Democrat on the tax-writing House Ways and Means Committee, has unveiled legislation to make it harder for companies to change their addresses for tax purposes.

His brother, Sen. Carl Levin (D-Mich.), has introduced similar legislation in the Senate, where Finance Committee Chairman Ron Wyden (D-Ore.) has also said he wants to tackle the issue.

“Barely a week seems to pass without news that another corporation plans to move its address overseas simply to avoid paying its fair share of U.S. taxes,” Rep. Levin said in a statement on Monday.  

“These corporate inversions are costing the U.S. billions of dollars and undermining vital domestic interests. We can and should address this problem immediately through legislation to tighten rules to limit the ability of corporations to simply change their address and ship U.S. tax dollars overseas.”

Given the gridlock on Capitol Hill, however, tax lobbyists don’t expect Congress to pass any legislation on inversions any time soon, despite the tough Democratic rhetoric.

Wyden has said he would prefer to deal with the matter through a broader rewrite of the tax code.

Top GOP tax writers have insisted that going after inversions ignores the key reason that companies seek to move abroad: the U.S.’s top statutory corporate tax rate of 35 percent, the highest in the industrialized world.