W.H. ups pressure on offshore tax deals

Treasury Secretary Jack Lew has intensified the pressure on Congress to act on certain offshore tax deals, saying in a new op-ed that it’s become “increasingly urgent” to act on so-called inversions.

{mosads}Lew wrote that the recent influx in those cross-border deals could cost the Treasury hundreds of millions of dollars a year, even as those companies that shift their corporate address abroad generally make few changes to their business models.

The Obama administration has been increasingly calling on Congress to act on inversions since the middle of this month. But Stephen Shay, a former senior Treasury official for administrations of both parties, said this weekend that President Obama had some power to act unilaterally to limit inversions.

Lew’s op-ed said that an overhaul of the tax code was the best method for dealing with inversions, but that a targeted measure could help bridge the gap until tax reform.

“Even if we cut our tax rates and broaden the tax base, we would still need to enact anti-inversion provisions because companies always would find countries with near-zero rates to which they could relocate,” Lew wrote in The Washington Post. 

Lew’s op-ed comes less than two weeks after he pressed lawmakers on the cross-border deals, saying that the U.S. needs a “new sense of economic patriotism.”

President Obama himself weighed in last week, deriding companies that shift their legal address abroad for tax reasons as “corporate deserters.”

Democrats on Capitol Hill have been pushing for legislation, but most Republicans say that a targeted proposal wouldn’t change the underlying problem of the U.S.’s 35 percent corporate tax rate.