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House Members Express Support for Debt-Equity, Inversion Regs

JUL. 7, 2016

House Members Express Support for Debt-Equity, Inversion Regs

DATED JUL. 7, 2016
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July 7, 2016

 

 

The Honorable Jacob Lew

 

United States Treasury Secretary

 

U.S. Department of the Treasury

 

1500 Pennsylvania Avenue, N.W.

 

Washington, D.C. 20220

 

 

Dear Secretary Lew:

We write in support of temporary regulations on inversions and proposed regulations addressing earnings stripping that the Treasury Department released in April. We previously wrote to you in February urging you to use all of your existing regulatory authority to change the incentives and close the loopholes that some companies are using to renounce their American citizenship to avoid paying their fair share of taxes.

The U.S. Treasury is losing billions to these tax-dodging maneuvers, and your timely action is crucial. The OMB estimated budget effect of the earnings stripping regulations alone is over $800 million for one year. Given inaction from this Congress, we agree that it is important to act and not wait for billions more in lost revenue. While there is more that may be done by Administration action, we commend the work you have done to this point.

We urge you to finalize these regulations as expeditiously as possible after July 7, the deadline for submission of formal comments. We understand that you will be making adjustments to the proposed regulations on earnings stripping to respond to public comments as appropriate, including to avoid unintended consequences that would impact legitimate business transactions. But we ask that you remain committed fully to do all that is administratively possible to discourage corporations from renouncing their American charters to avoid taxes by adopting a foreign address. The underlying objective of these regulations -- targeting transactions that do not fund actual business investments -- in our judgment is a correct objective. We urge you not to yield to the intense lobbying against these regulations, directed at both Treasury and the Congress, by multinational business and its trade associations.

We will continue to work to pursue legislative solutions to these issues, including an exit tax on companies that change to foreign control. While we wait for a new Congress to take action on these issues, we appreciate the leadership you have shown in using existing authority to curb inversions.

Sincerely,

 

 

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