Corporations are people, which means they sometimes give up their U.S. "citizenship" to incorporate somewhere else for tax breaks through a process called corporate inversion. This is something companies have been doing for years, but government officials expect a wave of big announcements in the coming months, costing the country millions in tax revenue.
Still, as usual, there's more outrage floating around than solutions. As Congress debates a way to fix this problem both parties agree exists, Democrats are urging the Obama administration to fix the problem through an executive action. Companies too have been urging Congress to curb inversions. Last month CVS Caremark chief executive Larry Merlo asked Sen. Chuck Schumer to do something about inversions before CVS is forced to expatriate as well, according to The Washington Post. Here's a list of who's currently pushing for an inversion fix:
Congress: Both parties want to fix the inversions, but can't agree on how to do it — same as it ever was. Democrats want to remove the incentives corporations have for repatriating, and Republicans want to lower the corporate tax rate from 35 percent to 28 percent. As Mother Jones' Kevin Drum writes, it's all really depressing:
Republicans, for their part, have proposed wide-ranging tax reform, but the prospect of getting the current Congress to agree on wide-ranging tax reform is laughable. ... So now Democrats are pushing Obama to fix the problem administratively, and Republicans in turn are yelling "tyranny!" And that's where we stand.
Sens. Richard J. Durbin, Jack Reed and Elizabeth Warren: In a new letter the trio announced the Stop Corporate Inversions Act, which would reduce the incentives (like tax breaks) for American companies. At the same time, according to the letter, "our efforts should not preclude executive action to prevent corporate inversions. The coming flood of corporate inversions justifies immediate executive action.”
The Obama administration: Treasury Secretary Jacob J. Lew announced Tuesday that the administration is considering ways to go around Congress and issue an executive order that would stem inversions. “The question is, Can we do enough that it will materially change the economics of inversions so that companies will make different decisions?” Lew said to The New York Times.
President Obama: Last month, President Obama said that, "I don’t care if it’s legal. It’s wrong," and called the practice unpatriotic. But Republicans are arguing that this is all campaign season talk geared towards painting Republicans as pro-corporations. Corporations, on GOP aide told The Post, are “about as popular as child molesters.” But this has been an issue for the president for a while. Back in March the president released a budget that would have made inversions nearly impossible, as The New York Times explained. That budget was D.O.A.
This article is from the archive of our partner The Wire.
We want to hear what you think about this article. Submit a letter to the editor or write to email@example.com.