Two new developments in negotiations over taxes could mean lawmakers are one step closer to restricting inversion deals.
Charles Schumer, a top Senate Democrat, offered a plan Tuesday to restrict inversions, and agreed to allow it to lapse after three years giving Democrats one of their top priorities while also giving Republicans one of their top priorities - leveraging a full-scale tax code overhaul.
Lawmakers are also considering the possibility of combining anti-inversion legislation with significant tax breaks that Republicans want, such as a permanent tax credit for business research. This legislation could also be combined with tax breaks that Democrats are pushing for, such as college tuition.
Republicans have consistently opposed Democrats' calls for legislation restricting inversion, while insisting the problem lies with the tax code as a whole.
Inversion occurs when a U.S. company moves its tax address to a country with more lenient corporate taxes in an effort to reduce its taxable income. This typically happens through a merger with a smaller foreign company. Members of both political parties are concerned for the long-term health of the economy should the practice continue.
Senate Finance Committee Chairman Ron Wyden (D. Ore.) was in good spirits on Tuesday regarding the proposed inversion legislation.
"Following efforts in August, it's clear there is an opportunity for bipartisan agreement on short-term legislation that will make inversions less attractive," he said. "I'm committed to working across the aisle to find a solution."
Sen. Orrin Hatch of Utah, the panel's top Republican, responded by saying he is "hopeful" the bipartisan discussions will lead to a solution, although he failed to offer a clear indication of imminent progress.
Source: McKinnon, John, "Inversion Debate Considers Tax Breaks," The Wall Street Journal, September 9th, 2014