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Tag: offshore taxes
As Congress Returns To Work, Politics Is High On The Agenda

As Congress Returns To Work, Politics Is High On The Agenda

By William Douglas, McClatchy Washington Bureau

WASHINGTON — Congress returned Monday for a two-week session with a schedule that’s short on substantive action and long on political theater ahead of November’s midterm elections.

Rather than go out in a blaze of legislative accomplishment before the Nov. 4 elections, members of the House of Representatives and the Senate appear satisfied with doing the bare minimum required before returning to their districts to campaign.

Keeping the federal government operating beyond Sept. 30, extending or shutting an agency that helps U.S. businesses sell their products overseas, and whether to formally weigh in on the recent violent activities of the Islamic State top the agenda.

After that, the Democratic-controlled Senate and the Republican-run House will conduct a series of votes and debates designed more to appeal to each party’s political base than to become law.

For example, the Senate was scheduled to vote Monday on a Democratic-sponsored measure to consider a constitutional amendment on the nation’s campaign finance laws, a nonstarter among Republicans.

House Republicans are slated to fold their previously passed jobs measures into one bill and put it up to a vote during the two-week session. House Majority Leader Kevin McCarthy of California told fellow Republicans last week that the vote is designed “to remind (Senate Majority Leader) Harry Reid of our positive solutions and foster job creation.”

“Do a quick kick and get out of town,” said Robert Bixby, the executive director of the Concord Coalition, a nonpartisan government-watchdog group. “This has kind of become the new regular order. It’s not a good thing, but it’s better than a shutdown.”

As early as this week, lawmakers will vote on a short-term continuing resolution to fund the government past the Sept. 30 end of the fiscal year and avoid a repeat of last October’s 16-day partial government shutdown.

The measure once again signifies the failure of Democrats and Republicans in the two chambers to reach consensus on serious budgetary issues and punts the responsibility of passing a budget into the hands of a post-election lame-duck Congress — or even a new Congress in 2015.

Though the resolution is expected to pass, there might be some problems along the way. One of them could be the federal Export-Import Bank, which would run out of funding if Congress fails to reauthorize it by Sept. 30.

The bank is the bane of conservatives, who consider it a testament to “crony capitalism” and a heavy-handed institution that picks business winners and losers.

There’s bipartisan support for the bank among Democratic and Republican leaders, though they disagree on the length of the reauthorization.

With House members and senators assembled in Washington for the first time since late July, both chambers are expected to discuss the deteriorating situation in the Middle East and the deadly rise of the Islamic State.

But it’s unclear whether lawmakers will do anything more than talk and hold hearings such as the Sept. 16 House Foreign Affairs Committee session on the Islamic State, in which Secretary of State John Kerry is scheduled to testify.

AFP Photo/Michael Mathes

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Lew Pushes Congress For Action On Corporate Offshore Tax ‘Inversions’

Lew Pushes Congress For Action On Corporate Offshore Tax ‘Inversions’

By Jim Puzzanghera, Los Angeles Times

WASHINGTON — The Obama administration is close to finishing an evaluation into executive action to make a recent rise in corporate offshore tax shifting “less economically appealing,” but the best way to limit the maneuver is with legislation, Treasury Secretary Jacob J. Lew said Monday.

Lew said it was “imperative” that Congress act to limit so-called tax inversions, in which a U.S. company buys a smaller foreign rival and moves its headquarters there to take advantage of lower taxes.

Lew delivered his message in a speech to the Urban Institute think tank as lawmakers returned to Washington on Monday from their summer recess.

Democratic legislation is stalled in the House and Senate because of Republican insistence the issue be addressed as part of a broad overhaul of corporate taxes.

The Obama administration also would like to deal with the issue through such an overhaul, Lew said.

But with inversions happening more frequently, “we cannot wait to complete business tax reform before taking action to fix this problem,” he said.

Treasury officials have been looking into possible regulatory steps and are “completing an evaluation of what we can do to make these deals less economically appealing,” Lew said.

A decision will be made “in the very near future,” he said.

But there are limits to what the administration can do without legislation, Lew admitted.

“Any action we take will have a strong legal and policy basis, but will not be a substitute for meaningful legislation — it can only address part of the economics,” Lew said. “Only a change in the law can shut the door, and only tax reform can solve the problems in our tax code that leads to inversions.”

Inversions by U.S. companies have become more popular as many nations have taken steps to be more business-friendly, leaving the United States with the highest corporate tax rate among developed economies.

In recent weeks, Miami-based Burger King Worldwide Inc. announced it would shift its headquarters to Canada after the purchase of Tim Hortons Inc., and Illinois drugmaker AbbVie Inc. said it would reincorporate on the British island of Jersey after buying European rival Shire.

The Obama administration has been sharply critical of such moves, in which a domestic firm remains largely in the United States but its address changes for tax purposes.

The White House wants new limits that would apply to any inversions that took place since April.

“This practice allows the corporation to avoid their civic responsibilities while continuing to benefit from everything that makes America the best place in the world to do business — our rule of law, our intellectual property rights, our support for research and development, our universities, our innovative and entrepreneurial culture, and our skilled workforce,” Lew said Monday.

“This may be legal, but it is wrong, and our laws should change,” he said, echoing comments in July calling for U.S. companies to show “economic patriotism.”

It’s unclear what executive actions can be taken that would discourage inversions. Any steps short of changing the law are likely to be “relatively symbolic and toothless,” said Chris Krueger, a senior analyst at financial services firm Guggenheim Partners.

But talk of new retroactive limits on inversions is causing corporations to reconsider such moves, he said.

Sens. Charles Schumer (D-NY), and Richard Durbin (D-IL), are expected to propose new legislation this week aimed at reducing interest deductions for inverted companies. The bill would apply to companies that inverted since 1994.

Republicans probably will block a vote, and chances of any stand-alone inversion legislation passing this year is less than 10 percent, Krueger said.

AFP Photo/Saul Loeb

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