Tax Writers Seek to Tackle Inversions and Extenders
Senate Finance leaders are already in talks to address the timely issue of corporate inversions, but face tougher hurdles to renew dozens of expired tax breaks known as tax extenders.
Following the recent news that Burger King, the nation’s second-largest burger chain, will acquire the Canadian coffee-shop company Tim Hortons and move its operations to Canada, lawmakers have vowed to move quickly to address the latest tax inversion wave.
Senate Finance Committee Chairman Ron Wyden (D-OR) called inversions a “virus [that] continues to plague our country” and said the issue demands a bipartisan resolution as soon as Congress returns from recess after Labor Day.
Wyden said he’s already been in talks with Sen. Orrin Hatch (R-UT), ranking member of Senate Finance, to define key principles of legislation to close the inversion loophole. Hatch, for his part, has said any action by Congress in the near term to deter companies from redomiciling their operations overseas should be an interim measure, and that the real solution is to create a tax environment more favorable to businesses.
“It is imperative that any such interim proposal be a bridge to our ultimate solution to address the cause of the problem: our obsolete tax code,” Hatch said in a Washington Post op-ed.
Hatch and others know that comprehensive tax reform is unlikely until 2015 at the earliest, and the tax-writing committees still face the challenge of reaching a bipartisan agreement to renew tax extenders. The House has passed bills to make permanent several business-related tax provisions, as well as three charitable extenders, while the Senate is stalled on a broad-based bill to extend dozens of tax breaks for two years.
Republicans have said that they plan to push to make several of the expired tax breaks permanent whenever the House and Senate conference on the issue, focusing first on the popular tax credit for research and development.
A recent move by Burger King to buy out Canadian chain Tim Hortons drew attention to tax-inversion deals. (iStock/Thinkstock)