Congress Needs to Stop Tax Inversions Now

Here’s something we can all agree on: tax inversions are a big, big problem. Companies changing their address – on paper only – to lower the taxes they pay in the U.S. is costing us tens of billions of dollars.

But instead of acting to immediately stop inversions, Republicans on the Ways and Means Committee today are holding a hearing on international tax reform. We should do tax reform. But closing this gaping loophole cannot wait.

In his testimony for today’s hearing, USC Professor Ed Kleinbard wrote:

“Once the reasons for inversions are more clearly understood, and the fuzzy claims of U.S. tax law as systematically anticompetitive in the international setting swept away, then it becomes possible to move forward in a targeted way that snatches the revenue bleeding from inversions without foreclosing or foreshadowing any particular future tax reform.”

And he’s not alone in his thinking. Earlier this month, Treasury Secretary Jack Lew told the Ways and Means Committee:

“If we can't deal with the whole tax code, I don't think that we can justify—I can't justify—doing nothing while another year of inversions goes on.”

And the New York Times Editorial Board laid it out clearly:

“Many lawmakers, chiefly Republicans, seize upon the wave of inversions as proof that corporate taxes in the United States are too high. Reform the corporate code by slashing rates, they argue, and inversions will end. Granted, corporate tax reform is needed. But allowing inversions to proceed in order to make a partisan point is not the way to approach it.”

It’s simply too important an issue for Republicans to sit on their hands now and do nothing. That’s the fact.

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