Wyden Pushes US Tax Reform As Inversion Activity Slows
Senate Finance Committee Chairman Ron Wyden has indicated that, as companies appear to be reconsidering inversions following the administrative measures put forward by the Treasury Department last month, he is focused on reforming the US tax code, rather than pressing for immediate anti-inversion legislation.
“While it looks like the rush of inversions is slowing, we are continuing to examine the issue while focusing on fixing the root problem – our broken tax code,” he stated. “I’m committed to continued work across the aisle to close loopholes and get bipartisan, comprehensive tax reform done.”
Wyden’s statement on the reduced priority for stop-gap anti-inversion legislation followed AbbVie Inc’s decision to pull out of its merger with UK-based Shire plc, as well as Salix Pharmaceuticals’ previous announcement that put a stop to its deal with the Irish subsidiary of Italian company Cosmo Pharmaceuticals SpA.
His position could change again if more multinationals, like Medtronic Inc., in its deal to acquire Dublin-based Covidien plc, look at Treasury’s non-legislative measures with their advisers and decide that an inversion to move their tax residence abroad could still be an effective means of reducing their tax payments.
If that were the case, the passage of anti-inversion legislation through Congress would remain difficult, in the face of a Republican Party that considers tax reform – to cut the corporate tax rate and change the way the US taxes foreign earnings – to be the only real long-term solution for halting inversions.
