By Marc Heller
Aug. 14 — Sen. Charles E. Schumer (D-N.Y.) launched a new attack on corporate inversions but appeared to hit a headwind from Senate Finance Committee Chairman Ron Wyden (D-Ore.).
Schumer outlined what he called a Democratic proposal Aug. 14 to curb companies' ability to transfer foreign debt to their U.S. operations to receive more favorable tax treatment, a practice known as earnings stripping.
Schumer said he would mesh his proposal with Wyden's efforts, as well as those of Sen. Carl Levin (D-Mich.), to discourage inversions, through which companies reincorporate in foreign countries to take advantage of lower tax rates.
The senator's proposal is a further signal of a punitive approach some Democratic lawmakers are taking toward the issue, which has heated up ahead of November midterm elections that have put control of the Senate in play. Many congressional Republicans have said they dislike the Democrats' approach but aren't opposed to some sort of government action to discourage inversions, even absent more fundamental changes in the tax code.
Wyden and Sen. Orrin Hatch (R-Utah) have repeatedly said they are discussing how to bring the parties together on the issue so that lawmakers might take it up before the end of the year. Hatch and other Republicans say they oppose penalizing companies retroactively for inversions and that the best approach is to reduce the U.S. corporate tax rate.
In the House, Rep. Sander Levin (D-Mich.), ranking member on the Ways and Means Committee, has drafted legislation—but not introduced it—to combat earnings stripping. A draft has been circulated among tax lobbyists, although a spokesman for Levin said the final version is yet to come.
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