Tuesday, August 05, 2014

Obama Weighing Options to Stop Corporate Tax Flight

By JULIE HIRSCHFELD DAVIS, NYT, AUG. 5, 2014

WASHINGTON — The Obama administration is weighing plans to circumvent Congress and act on its own to curtail tax benefits for United States companies that relocate overseas to lower their tax bills, seeking to stanch a recent wave of so-called corporate inversions, Treasury Secretary Jacob J. Lew said on Tuesday.

Treasury Department officials are rushing to assemble a broad array of options that would “change the economics of inversions,” Mr. Lew said. Options are still being developed although no final decision has been made about whether to go forward with administrative action to strip away tax incentives for the deals.

The action comes in the face of a recent increase in United States companies reaching deals to reorganize overseas, creating an explosive political issue that Mr. Obama has seized on to talk about a lack of “economic patriotism.” Investment banks have been counseling companies to pursue such transactions because of the potential tax benefits. Two large United States pharmaceutical companies — the drug giant AbbVie, based in Illinois, and the generic manufacturer Mylan, based in Pennsylvania — agreed to such deals last month, and Walgreen, owner of the drugstore chain, is considering one.

(More here.)

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