Can the U.S. Treasury Stop Tax Inversions?

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Aug. 26 (Bloomberg) -- Penn State Professor Samuel Thompson discusses the U.S. Treasury’s options for stopping corporate tax inversions. He speaks on “Bloomberg Surveillance.” (Source: Bloomberg)

And he also has treasury's year.

He joins us from state college pennsylvania.

Sam, your plan involves the treasury to make changes to the tax code, without getting into the my new show of section 385, treasury could pick up the slack because congress cannot do much here.

Of that is right.

I believe that the treasury has the authority under section 385 to deal specifically with these and version transactions.

In my judgments, debt is being issued in these transactions.

That is really sort of false debt, and i believe the treasury has the authority to deal surgically with this type of debt that is being issued in and version transactions and similar transactions.

What kind of response have you gotten from treasury on this plan?

I have not gotten any response from treasury.

I wrote a letter to the treasury secretary about a week ago, but i have not gotten any response, and i would just like to correct something you said.

You said i have the ear of the treasury.

I do not have the ear of the treasury.

I have communicated my views to the treasury and i have written extensively on this and i suspect that they are familiar with my writings on it.

Professor, i read your letter to the treasury.

I tried to read it like a tax lawyer, and i have got language that reads -- if the corporation is managed or controlled or has significant business operations there -- and then as a tax lawyer i get excited because they can be interpreted different ways.

If treasuries could have solved this on their own, does this come down to interpretation and enforcement?

Well, what you just referred to is not within the realm of the treasury.

It is in the realm of the congress.

Treasury has proposed that companies like the transaction and burger king, that the foreign holding company would be treated as a u.s. company is the u.s. shareholders own more than 50% of the company, but that would be a legislative action and not an administrative action.

Sam, i want to bring in our guest host, tim bitsberger.

He has a question as well.

I ask this as a board member -- a net capital have the right to move freely to enrich shareholder value?

I feel like some of these actions being proposed are kind of knit taking and don't really encompass what is best for shareholders.

You are absolutely right.

Capital should move to the place that is going to have the most profits for shareholders, but the government has the obligation to set up rules , and when you have rules that allow inverters to undermine u.s. tax system, in my judgment, the government is not doing its job in less it tries to address it.

Thank you so much.

X so yes, companies have the right to do that.

And treasuries now scrambling for ways to see what he can do to reverse this tide of tax inversions.

Samuel thompson of penn state law, thank you so much for joining us.

This is "bloomberg surveillance." when we come back, we will discuss how to make money in a bond market right now.

It is a big mystery given that

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