GOP reps warn Obama against quickly finalizing tax rules

Republicans on the House Ways and Means Committee said Wednesday that it would be “ill-advised” at this time for the Obama administration to finalize its proposed new tax rules.

{mosads}The regulations to treat some inter-company debt as equity should not be finalized “in haste,” the House GOP tax writers said in a letter to Treasury Secretary Jack Lew and Office of Management and Budget (OMB) Director Shaun Donovan.

“Any revised rules should be issued as proposed regulations only, which should be finalized only after the vetting necessary to ensure that the rules are right,” the lawmakers wrote.

“Rules should be effective only when issued in final form and only on a fully prospective basis. Given the significance of these rules, they should be accompanied by a thorough analysis of the economic impact as required by law.”

The Treasury Department released the proposed rules in April and recently sent final rules to the OMB for review.

The rules were part of a package aimed at curbing so-called corporate inversions — transactions in which U.S. companies reincorporate overseas for tax purposes after merging with foreign companies.

However, lawmakers and business groups have said that the proposed rules are too broad and would affect routine business practices that have nothing to do with inversions. 

“We believe these rules if finalized would have a significant adverse impact on the American economy, discouraging investment and hurting American jobs and workers,” the Ways and Means Republicans said.

Lew met with Republicans and Democrats on the committee last month and told the lawmakers that he wants to get the rules right. The committee Republicans said that the administration needs to issue another set of proposed rules before finalizing them because “getting the rules right will require further engagement with stakeholders to prevent irreparable damage to business and jobs here at home.”