Offshore Corporate Tax Ploy Targeted By Senators

The practice known as “inversion,” whereby a corporation relocates its headquarters offshore to a cheaper tax venue, is the target of legislation proposed by a group of Democratic senators. The bill, proposed by Sen. Carl Levin (D-Mich.) and 13 other Democrats, would require a far higher percentage of foreign ownership plus an actual shift in management and central operations before a company could be defined as non-U.S. for tax purposes. The bill would enact a two-year inversion moratorium as opposed to long-term reform, which sponsors consider a more difficult slog politically. A House version of the bill, however, does propose a long-term fix. Some Republicans voiced opposition to any legislation targeting inversion on the grounds that its attraction is the result of an excessive U.S. corporate tax rate, and that’s what needs to be changed.