Democrats put target on 'corporate deserters'
By Bernie Becker - 01/20/15 01:42 PM EST
Congressional Democrats said Tuesday they would seek any and
all avenues to curb offshore tax deals, kicking off a new effort to punish what
they call “corporate deserters.”
Senior Democrats on both sides of the Capitol brought back
legislation to make it more difficult for corporations to merge with a foreign
competitor and shift their legal address abroad.
“We believe we need fairness in the tax code,” Senate Minority Whip
Dick Durbin (D-Ill.) said at a news conference announcing the legislation.
Democrats introduced the legislation last year as well, at
the same time President
Obama and other senior officials
in the party questioned the patriotism of companies like Pfizer Inc. and Walgreen Co. that looked into so-called
corporate inversions.
After Congress deadlocked over the tax deals in 2014, the
Treasury Department put in place new rules targeting the economic benefits for
companies that reincorporate offshore. But both lawmakers and the Obama
administration said tougher measures would require action from Congress.
Durbin, Sen. Jack Reed (D-R.I.), Rep. Sandy Levin (D-Mich.)
and Rep. Lloyd Doggett (D-Texas) introduced legislation Tuesday that would
raise almost $34 billion over a decade.
Under the bill, a merged company would still be counted as
American for tax purposes unless at least 50 percent of the shareholders in the
new corporation came from the foreign business. Currently, that threshold
stands at 20 percent.
The Democrats introducing the measure said they were willing
to discuss the measure as part of broader negotiations over tax reform. But
Levin, the top Democrat on the tax-writing House Ways and Means Committee,
added that he didn’t think lawmakers should wait any longer to act.
“There’s a lot of talk these days, appropriately, about
middle-class squeeze,” Levin said. “I think what the middle-class wants us to
do, when they pay their fair share, is to close loopholes.”
Levin’s comments underscored the economic populist message
that Democrats are employing in the run-up to Obama’s State of the Union
address on Tuesday. The White House has already said that the president will
pitch a plan to raise capital gains taxes on the wealthy to help pay for
priorities for the middle-class.
Those proposals have already fallen flat with Republicans,
who say Democrats are dabbling once more in class warfare and income
redistribution. Top GOP lawmakers said last year that they would discuss
inversions as part of tax reform negotiations, while also insisting that only a
friendlier tax climate would keep businesses from trying to flee.
With that in mind, Durbin said Tuesday that Democrats would
discuss trying to force floor votes on the anti-inversion legislation. Senate
Majority Leader Mitch McConnell (R-Ky.) has promised a more open floor
procedure in the chamber under Republican rule.
Levin also noted that Treasury is continuing to work on regulations
on the matter, targeting a process known as earnings stripping. Under that
maneuver, U.S. subsidiaries of foreign companies can take a tax deduction on
interest payments from loans they receive from foreign parent companies.
The current Treasury rules have already had an impact, with
the pharmaceutical company AbbVie ultimately deciding against a $55 billion
merger.
Even so, Democrats insisted that Washington hadn’t yet
stemmed the tide against inversions, and that their push for legislation would
give them a chance to wrong-foot Republicans.
“Very few, if any, Republicans came to the defense of these
inverted corporations,” Durbin said about the 2014 debate. “This is hard to
explain, and also impossible to defend.”
Pfizer Inc.
Sidley Austin
LLP was the lobby firm for Pfizer
Inc.
Note: R. Eden Martin is
counsel at Sidley Austin LLP, and
the president of the Commercial Club of
Chicago.
Commercial Club of
Chicago, Members Directory A-Z (Past Research)
Tuesday, December 17, 2013
Newton
N. Minow is a member of the Commercial
Club of Chicago, and a senior counsel at Sidley Austin LLP.
Michelle
Obama was a lawyer at Sidley Austin
LLP.
Barack
Obama was an intern at Sidley Austin
LLP, and Obamacare is his signature
policy initiative.
CGI Group Inc.
was the Obamacare contractor that
developed Healthcare.gov web site.
Donna
S. Morea was the EVP for the CGI
Group Inc., and a trustee at the Committee
for Economic Development.
Foundation
to Promote Open Society was a funder for the Committee for Economic Development, the Harlem Children's Zone, the International
Rescue Committee, and the Brookings
Institution (think tank).
George Soros
was the chairman for the Foundation to Promote Open Society, and a
benefactor at the Harlem Children's Zone.
Stephen W. Sanger
is a trustee at the Committee for
Economic Development, and a director at
Pfizer Inc.
Frederick W.
Telling is a trustee at the Committee
for Economic Development, and was a VP for Pfizer Inc.
Kenneth G. Langone
is a trustee at the Harlem Children's
Zone, and was a director at YUM!
Brands, Inc.
Thomas C. Nelson
is a director at YUM! Brands, Inc.,
and a trustee at the Committee for
Economic Development.
Steven A. Davis
was a division president for YUM!
Brands, Inc., and is a director at the Walgreen
Co.
George
E. Rupp was a trustee at the Committee
for Economic Development, and is the overseer; former president & CEO
for the International Rescue Committee.
Joshua S. Weston
was a trustee at the Committee for
Economic Development, and is a director at the International Rescue Committee.
Timothy F. Geithner
is a director at the International
Rescue Committee, was the secretary at the U.S. Department of the Treasury for the Barack Obama administration, and an overseer at the International Rescue Committee.
Internal
Revenue Service (IRS) is a
division of the U.S. Department of the
Treasury.
International
Rescue Committee is a partner with the ONE
Campaign.
Michelle
Obama is an advocate for the ONE Campaign,
and was a lawyer at Sidley Austin LLP.
Barack
Obama was an intern at Sidley Austin
LLP.
Sidley Austin
LLP was the lobby firm for Pfizer
Inc.
Sally
Susman is a director at the International
Rescue Committee, and the EVP for Pfizer
Inc.
James D. Wolfensohn is an overseer at the International Rescue Committee, was an
honorary trustee at the Brookings Institution (think tank), a director
at the American Friends of Bilderberg (think tank) and a 2008 Bilderberg
conference participant (think tank).
John
C. Whitehead is an overseer at the International
Rescue Committee, and an honorary trustee at the Brookings Institution
(think tank).
Tracy R. Wolstencroft
is an overseer at the International
Rescue Committee, and a trustee at the Brookings Institution (think
tank).
Constance J.
Horner was a guest scholar at the Brookings
Institution (think tank), and is a director at Pfizer Inc.
Suzanne Nora
Johnson is a trustee at the Brookings
Institution (think tank), and a director at Pfizer Inc.
Amy
W. Schulman is a trustee at the Brookings
Institution (think tank), and was an EVP & general counsel for Pfizer Inc.
Akin,
Gump, Strauss, Hauer & Feld, LLP is the lobby firm for Pfizer Inc.
Vernon E. Jordan
Jr. is a senior counsel for Akin,
Gump, Strauss, Hauer & Feld, LLP, an honorary trustee at the Brookings
Institution (think tank), Valerie B.
Jarrett’s great uncle, a director at the American Friends of Bilderberg
(think tank), and a 2008 Bilderberg conference participant (think tank).
Cyrus F.
Freidheim Jr. is an honorary trustee at the Brookings Institution (think tank), and a member of the Commercial Club of Chicago.
Valerie B. Jarrett
is Vernon E. Jordan Jr’s great niece, the senior
adviser for the Barack Obama
administration, and a member of the Commercial
Club of Chicago.
R.
Eden Martin is the president of the Commercial
Club of Chicago, and counsel at Sidley
Austin LLP.
Newton
N. Minow is a member of the Commercial
Club of Chicago, and a senior counsel at Sidley Austin LLP.
Barack
Obama was an intern at Sidley Austin
LLP.
Sidley Austin
LLP was the lobby firm for Pfizer
Inc.
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