Congressional Democrats are preparing new efforts to curb the offshore tax deals that drew the ire of President Obama last year.
{mosads}Senate Minority Whip Dick Durbin (D-Ill.), Sen. Jack Reed (D-R.I.), Rep. Sandy Levin (D-Mich.) and Rep. Lloyd Doggett (D-Texas) will introduce legislation on Tuesday seeking to stop the maneuver known as inversions, in which companies can slash their tax bill by shifting their legal address abroad.
Levin, the top Democrat on the House Ways and Means Committee, and Doggett will be reintroducing the bill they first rolled out last year, Democratic aides said. That measure sought to essentially ban U.S. multinational corporations from taking over a smaller foreign competitor and reincorporating offshore.
Democrats started sharply criticizing the practice last year after several big-name U.S. companies – including the pharmaceutical giant Pfizer and the pharmacy chain Walgreens – contemplated reincorporating offshore. Obama, for instance, suggested that companies that employed the maneuver were unpatriotic.
Durbin and Reed are expected to introduce a companion bill at a news conference on Tuesday, featuring all four Democratic lawmakers.
The House Democratic bill from 2014 would have put permanent limits on inversions, raising more than $33 billion over a decade, according to the Joint Committee on Taxation.
Former Sen. Carl Levin (D-Mich.) introduced a similar two-year measure that would have essentially only allowed companies to move their tax address abroad if they merged with a larger foreign company. Both Durbin and Reed were co-sponsors of that measure.
Democrats had hoped that the offshore tax deals would be a potent political issue for them in last year’s midterms, but the issue failed to catch on with voters.
But the deals still fire up liberals. Antonio Weiss, Obama’s choice for a senior Treasury position, asked not to be re-nominated this year after several Democrats opposed him because of his work on the offshore mergers.
The new anti-inversion effort adds a new wrinkle to the debate over tax reform. Both the White House and Republicans have expressed a willingness to work on an overhaul of the tax system for U.S. businesses.
But administration officials have said any revamp would need to have measures curbing the offshore tax deals, while top Republicans have been skeptical that such targeted provisions can work. During last year’s debate, GOP lawmakers pointed out that Congress enacted anti-inversion measures a decade ago, only for the issue to pop back up.
The two parties are further apart on tax changes for individuals. Obama will announce new proposals to increase taxes on the wealthy to pay for tax breaks for the middle-class in his State of the Union address on Tuesday.
But Republicans have already pushed back on those ideas, drawing further distinctions between the GOP and Democrats ahead of 2016.