Obama Says Administration Seeking Ways to Curb InversionsMargaret Talev and Lisa Lerer
President Barack Obama said his administration is looking for ways to use rules and regulations to curb corporate inversions in which U.S. companies seek to lower their tax bills.
Obama said the Treasury Department is examining whether it can change how it interprets existing tax laws to slow inversions while the administration continues to push a deadlocked Congress for action.
“We don’t want to see this trend grow,” Obama said at a news conference at the close of a summit with African leaders. “So we want to move quickly, as quickly as possible.”
Obama declined to give a timeline for action or specify what rules the administration is reviewing. He said the issue can’t entirely be addressed through administrative action and said Congress must reach agreement on changing U.S. tax law.
About three weeks after Treasury Secretary Jacob J. Lew said officials had scoured “obscure provisions” and determined that Treasury couldn’t act on its own, the department said yesterday it had begun exploring its options. In an inversion, a company moves its legal address outside the U.S. to lower its tax bill, typically by buying a smaller company.
The Treasury statement put companies on notice for possible new rules, even as the administration continues to push for legislation.
Congress is deadlocked on the issue and is on a break from Washington until September. In this election year, any movement on the issue looks unlikely, leaving the administration with a choice: press the political issue by pointing to inaction in Congress or attempt to address the problem by itself.
Democrats want retroactive limits to prevent U.S. companies from getting a foreign address by buying a smaller business. Republicans generally want to address the issue through a broader U.S. tax-code revamp that won’t occur until 2015 at the earliest.
The administration’s move alters the prospects for at least eight U.S. companies with pending inversions as well as dozens of others that have carried out the transactions and might become subject to limits on their American operations.