GOP senator open to short-term change on 'inversion' tax deals

Sen. Orrin Hatch (R-Utah) on Thursday said he was open to a short-term fix for offshore corporate tax deals, becoming the first top Republican to express support for the idea.

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In a letter to Treasury Secretary Jack Lew, Hatch, the Finance Committee’s top Republican, declined to lay out what sort of short-term measures he might propose for corporations that shift their legal address abroad, slashing their tax bill in the process.

“There may be steps Congress can take, short of comprehensive tax reform, to address corporate inversions, and related issues,” Hatch said.

The Utah Republican was responding to a letter Lew sent this week, in which he called for immediate and retroactive action against a surge in the cross-border maneuver known as an "inversion."

Hatch took issue with one part of Lew's letter, chiding him for questioning the “economic patriotism” of corporations that shift their focus offshore.

“Ultimately, I share your desire for ‘a new sense of economic patriotism,’ though most of us never lost that sense and tend not to reserve it for election years,” Hatch wrote.

Pfizer’s bid to take over AstraZeneca drew increased attention to inversions, but a host of other companies — Walgreens and Medtronic, for instance — have also openly discussed such a move.

Lew’s letter put Democrats in Washington largely on the same page when it comes to inversion.

Sen. Carl Levin (D-Mich.) and Rep. Sandy Levin (D-Mich.) have proposed legislation based on a proposal from President Obama’s latest budget that would target inversions retroactive to May.

Senate Finance Chairman Ron Wyden (D-Ore.), who had previously said he wanted to deal with the offshore deals as part of a broader rewrite of the tax code, has sounded more interested in a short-term solution this week as well.

A spokesman for Hatch said that the senator was interested in taking broader steps to make the U.S. more business-friendly, and thus the idea of inversion less attractive.

The Democratic proposals to rein in inversions would essentially continue to count a corporation as domestic for tax purposes unless the company merged with a foreign competitor the same size or bigger.

Currently, a merged company where at least 80 percent of the shareholders are from the U.S. business can shift their legal address offshore for tax purposes.

Hatch said Thursday that he was “certain we can find alternatives that could easily be enacted and are less punitive and restrictive to businesses."