Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Democrats Ask Obama To Act Alone On Inversions
Author: Scarinci Hollenbeck, LLC
Date: August 14, 2014
Key Contacts
Back
A few key Democratic Senators have asked President Barack Obama to act alone to end the practice of corporate inversions.
Sen. Dick Durbin, D-Illinois; Sen. Elizabeth Warren, D-Massachusetts; and Sen. Jack Reed, D-Rhode Island, sent Obama a letter Aug. 5 asking that he pass an executive order to eliminate or reduce the tax breaks companies see by undergoing an inversion, according to the St. Louis Post-Dispatch.
Corporate tax law allows inversions, but they have become highly controversial in the past several months. In an inversion, a U.S. multinational company acquires a smaller, foreign company and uses this event to “merge” with the company and re-domicile abroad. This enables the new company to pay a tax rate that is lower than the U.S. corporate income tax rate of 35 percent.
“Although we will continue to work toward a legislative solution to the problem, we urge you to use your authority to reduce or eliminate tax breaks associated with inversions,” Durbin, Warren and Reed wrote to Obama, according to the news source. “Inverted corporations take advantage of all the things American tax dollars provide — from tax credits for research and development, investments in transportation infrastructure, and strong patent and copyright protections, to profiting from taxpayer-supported programs like Medicare and the Veterans Health Administration. Yet, these companies claim to be foreign corporations when it’s time to pay their tax bill — denying the United States billions of dollars in tax revenue and thereby increasing the tax burden on other U.S. taxpayers.”
There has been some serious debate regarding the legality of an executive order in this situation, The New York Times explained. In a controversial article written a few days after the president raised the issue of inversions, former Obama administration Treasury Department official Stephen Shay suggested that the Treasury secretary could use the power to determine whether a given financial instrument should be treated as debt or equity to remove incentives to re-domicile abroad.
As tax attorneys in the Metropolitan area, this isn’t the first time James McDonough and I have written about tax inversions in the U.S. Here are just a few of our previous posts on the subject:
- Inversions To Be An Election Hot-Button Issue
- What Corporate Inversions Are Telling Us (And What Washington Refuses To Hear)
- Treasury Secretary urges Congress to end inversions
- New Congressional Report Highlights Tax Inversions
- Medtronic the Latest Company to Propose Tax Inversion
- Report Shows How Much Walgreens Stands To Gain with Inversion
- Levin: Bill limiting corporate inversions later this week
- Senators consider closing tax inversion loophole
- Practices: Corporate Tax Planning
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Author: Jesse M. Dimitro
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Author: Jesse M. Dimitro
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Author: Scarinci Hollenbeck, LLC
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
Author: Dan Brecher
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
Author: Ronald S. Bienstock
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
Author: Patrick T. Conlon
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Democrats Ask Obama To Act Alone On Inversions
Author: Scarinci Hollenbeck, LLC
A few key Democratic Senators have asked President Barack Obama to act alone to end the practice of corporate inversions.
Sen. Dick Durbin, D-Illinois; Sen. Elizabeth Warren, D-Massachusetts; and Sen. Jack Reed, D-Rhode Island, sent Obama a letter Aug. 5 asking that he pass an executive order to eliminate or reduce the tax breaks companies see by undergoing an inversion, according to the St. Louis Post-Dispatch.
Corporate tax law allows inversions, but they have become highly controversial in the past several months. In an inversion, a U.S. multinational company acquires a smaller, foreign company and uses this event to “merge” with the company and re-domicile abroad. This enables the new company to pay a tax rate that is lower than the U.S. corporate income tax rate of 35 percent.
“Although we will continue to work toward a legislative solution to the problem, we urge you to use your authority to reduce or eliminate tax breaks associated with inversions,” Durbin, Warren and Reed wrote to Obama, according to the news source. “Inverted corporations take advantage of all the things American tax dollars provide — from tax credits for research and development, investments in transportation infrastructure, and strong patent and copyright protections, to profiting from taxpayer-supported programs like Medicare and the Veterans Health Administration. Yet, these companies claim to be foreign corporations when it’s time to pay their tax bill — denying the United States billions of dollars in tax revenue and thereby increasing the tax burden on other U.S. taxpayers.”
There has been some serious debate regarding the legality of an executive order in this situation, The New York Times explained. In a controversial article written a few days after the president raised the issue of inversions, former Obama administration Treasury Department official Stephen Shay suggested that the Treasury secretary could use the power to determine whether a given financial instrument should be treated as debt or equity to remove incentives to re-domicile abroad.
As tax attorneys in the Metropolitan area, this isn’t the first time James McDonough and I have written about tax inversions in the U.S. Here are just a few of our previous posts on the subject:
- Inversions To Be An Election Hot-Button Issue
- What Corporate Inversions Are Telling Us (And What Washington Refuses To Hear)
- Treasury Secretary urges Congress to end inversions
- New Congressional Report Highlights Tax Inversions
- Medtronic the Latest Company to Propose Tax Inversion
- Report Shows How Much Walgreens Stands To Gain with Inversion
- Levin: Bill limiting corporate inversions later this week
- Senators consider closing tax inversion loophole