Yesterday, evening, the U.S. Department of Treasury announced regulatory actions to discourage companies from taking advantage of a tax loophole known as a corporate inversion–moving their tax resident overseas on paper to avoid paying corporate taxes. The Main Street Alliance applauds the Treasury Department for taking this critical step.
For too long, large corporations have exploited tax gimmicks to dodge their financial responsibility while small businesses are left to pay the tab. This behavior not only erodes the U.S. tax base but undermines businesses who play by the rules.
The Main Street Alliance is delighted that the Treasury Department responded to our request, and that of our coalition partners, to tighten its regulations on inversions to stop proposed, abusive mergers, like the merger of the pharmaceutical giant Pfizer with Ireland-based Allergan. The Treasury's temporary regulations will prevent companies who are "serial inverters" from realizing tax benefits from these mergers. In the case of Pfizer, the estimated tax break on the company's offshore profits is $35 billion.
While these moves will limit the attractiveness of inversions, only Congress can eliminate them thoroughly. The Main Street Alliance calls on Members of Congress to close these and other tax loopholes that enable companies to shift their profits overseas as a means of corporate tax avoidance. Small businesses who invest in their communities should be rewarded–not penalized–for playing by the rules and helping to support the American economy.