Increasing problem: There has been a rapid increase in the number of U.S. multinational companies renouncing their citizenship by moving their addresses overseas to avoid paying U.S. taxes. Congress enacted Section 7874 of the Internal Revenue Code in 2004 as a way to discourage U.S. companies from acquiring smaller foreign companies and moving their tax home to a foreign jurisdiction to dodge U.S. taxes. Since the provision was enacted in 2004, there have been an increasing number of tax-motivated inversions by U.S. companies. For a list of inverted U.S. companies, see this resource by Bloomberg.
Costing taxpayers: Corporate inversions are costing the U.S. tax base billions of dollars in lost revenue, leaving ordinary Americans to foot the bill. The Joint Committee on Taxation estimates that House legislation to stop corporate inversions would save the U.S. tax base nearly $41 billion over 10 years.
Inverters continue to reap benefits: These companies continue to benefit from being headquartered in the U.S., with our robust financial markets, protection of intellectual property rights, support of research and development, along with our stable communities and wealth of educated workers.
Requiring immediate action: As we work towards comprehensive tax reform, we need to enact legislation now to prevent companies from simply changing their tax domicile to avoid paying U.S. taxes.
Current legislation introduced in the House:
- H.R. 415: Stop Corporate Inversions Act of 2015 (summary)(bill text)(JCT score)
- H.R. 4581: Stop Corporate Earnings Stripping Act of 2016 (summary)(bill text)
- H.R. 5261: Protecting the U.S. Corporate Tax Base Act of 2016 (summary)(bill text)