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Treasury cuts tax benefits for U.S. companies striking ‘inversion’ deals abroad

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Moving against tax-avoidance by corporations, the Obama administration is taking several actions to curb deals known as “inversions” that allow companies to escape U.S. taxes by reincorporating abroad.

The Treasury Department on Monday announced new rules, effective immediately, that will reduce tax benefits accessible to companies that have inverted and make new inversions more difficult and less potentially rewarding.

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Democratic President Barack Obama, who has sharply criticized inverting companies, said Treasury’s steps will discourage such deals, seen by some as a threat to the U.S. corporate income tax base.

“We’ve recently seen a few large corporations announce plans to exploit this loophole, undercutting businesses that act responsibly and leaving the middle class to pay the bill, and I’m glad that (Treasury) Secretary Lew is exploring additional actions to help reverse this trend,” Obama said in a statement.

Inversions have surged in the past year, pursued by big companies such as Burger King Worldwide Inc and Medtronic Inc. The deals usually involve a U.S. corporation buying a smaller, foreign rival and redomiciling in its home country, where taxes are lower.

Treasury Secretary Jack Lew said in a statement: “These first, targeted steps make substantial progress in constraining the creative techniques used to avoid U.S. taxes, both in terms of meaningfully reducing the economic benefits of inversions after the fact, and when possible, stopping them altogether.”

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Some companies had feared that new rules would be retroactive, but they were not.

Steps being taken include preventing inverted companies from gaining easier access to foreign profits using “hopscotch” loans; blocking inverted companies’ tax-free access to foreign units’ earnings; and tightening limits on ownership by the former U.S. owners of an inverted company, the Treasury said.

(Reporting by Kevin Drawbaugh, Jason Lange and Emily Stephenson; Editing by Diane Craft and Steve Orlofsky)

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Enjoy this piece?

… then let us make a small request. Like you, we here at Raw Story believe in the power of progressive journalism — and we’re investing in investigative reporting as other publications give it the ax. Raw Story readers power David Cay Johnston’s DCReport, which we've expanded to keep watch in Washington. We’ve exposed billionaire tax evasion and uncovered White House efforts to poison our water. We’ve revealed financial scams that prey on veterans, and efforts to harm workers exploited by abusive bosses. We’ve launched a weekly podcast, “We’ve Got Issues,” focused on issues, not tweets. Unlike other news sites, we’ve decided to make our original content free. But we need your support to do what we do.

Raw Story is independent. You won’t find mainstream media bias here. We’re not part of a conglomerate, or a project of venture capital bros. From unflinching coverage of racism, to revealing efforts to erode our rights, Raw Story will continue to expose hypocrisy and harm. Unhinged from corporate overlords, we fight to ensure no one is forgotten.

We need your support to keep producing quality journalism and deepen our investigative reporting. Every reader contribution, whatever the amount, makes a tremendous difference. Invest with us in the future. Make a one-time contribution to Raw Story Investigates, or click here to become a subscriber. Thank you.



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‘Megalomaniacal, paranoid, and psychopathic’: Economist sounds the alarm on Trump’s ‘bottomless malevolence’

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Economist Jeffrey Sachs, a professor of Health Policy and Management at Columbia University, has written a frightening warning about President Donald Trump's "paranoid and psychopathic" leadership style, and he says it could have disastrous consequences for the world if he wins a second term.

In an essay published at progressive news website Common Dreams, Sachs argues that it would be a grave mistake to treat Trump like a cynical politician, when in reality he is an impulsive and vindictive narcissist who acts on his angry whims.

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Trump baselessly accuses Democratic lawmaker of ‘violence’?? in insane tweet

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President Donald Trump, in a strangely giddy and unhinged tweet on Tuesday baselessly accused Democratic U.S. Congresswoman Rashida Tlaib of “violence.”

“Sorry, I don’t buy Rep. Tlaib’s tears. I have watched her violence, craziness and, most importantly, WORDS, for far too long,” Trump tweeted. “Now tears? She hates Israel and all Jewish people. She is an anti-Semite. She and her 3 friends are the new face of the Democrat Party. Live with it!”

It’s unclear what the president was referring to when he accused the Michigan Congresswoman of violence, but his other remarks appear to be directed at a press conference she held Monday.

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Trump’s Labor Department wants to ‘weaponize’ right-wing discrimination and bigotry

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Just in case you wanted to believe that the Trump administration isn’t on a campaign to trample rights for Americans, here comes the Labor Department to shove a grapefruit in your face.

Labor officials have made public a new rule—no Congress, needed, thank you—to allow companies contracting with the federal government who are “religion-exercising organizations” to ignore federal laws protecting the rights of gays, transsexuals, and who knows who else in hiring or workplace practices. Religious employers and companies with “closely held” religious ties now will be shielded from claims of bias in court or other law enforcement actions, says the rule.

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