Lawmaker offers bill to impose ‘exit tax’ on expatriating companies

Rep. Lloyd Doggett (D-Texas) introduced a bill that would impose an exit tax on expatriating companies, a concept Democratic presidential candidate Hillary Clinton has championed.

“American citizens who renounce their citizenship must pay an exit tax. American corporations should too. No more ‘take the money and run,’ ” said Doggett, who sits on the House Ways and Means Committee.

The bill has the support of 50 congressional lawmakers, according to a news release from Doggett’s office.

The bill is intended to reduce the tax benefits for companies that participate in corporate “inversions,” transactions in which U.S. companies combine with foreign companies and then reincorporate overseas to lower their taxes.

Inversions have gotten a lot of attention in Washington lately, since the Treasury Department issued new guidance earlier this month aimed at curbing them. The department’s actions led to the termination of the planned merger between U.S. pharmaceutical giant Pfizer and Irish-based Allergan.

“This new legislation would accomplish even more than Treasury’s guidance, providing an outline for a future Congress to take necessary action,” Doggett said.

Under the bill, the exit tax would be the greater of two calculations: the tax owed on the deferred foreign income of a U.S. company’s foreign subsidiary or the tax on the appreciation in value of the subsidiary.

The bill also includes provisions that are part of another anti-inversion bill Doggett sponsored along with House Ways and Means Committee ranking member Sandy Levin (D-Mich.). That bill would prevent inversions for tax purposes unless the shareholders of the foreign company own most of the merged company.

In the Senate, a bill offered by Sen. Sherrod Brown (D-Ohio) would also impose an exit tax on inverting companies.