An advocacy group for foreign companies that operate in the U.S. is urging Washington to tread carefully around so-called “inversion” deals.
Nancy McLernon, the group’s chief executive, said in a statement released Thursday that “companies that have chosen to invest billions of dollars in local communities across America now find themselves inadvertently caught in Washington’s ‘inversion fix’ crosshairs.”
President Obama and congressional Democrats have increasingly spoken out in recent weeks against inversion deals, which generally occur when larger U.S. companies buy smaller foreign competitors and reincorporate abroad in lower-taxed countries.
The White House has pushed Congress to enact legislation that would basically say that companies that make that sort of deal would still be counted as American for tax purposes.
But even without action on Capitol Hill, a former senior Treasury official has said that Obama has tools to limit inversions, such as making it harder for companies to claim deductions for interest expenses.
Obama said this week that he would also try to move quickly on administrative actions, even though the best way to deal with inversions would be through legislation.
But McLernon said those administrative proposals could also damage the dozens of foreign companies that are members of her organization, which includes Sony, Siemens and GlaxoSmithKline.
In a letter to top Senate tax writers this week, McLernon said that proposals currently being discussed would “discourage foreign-based multinationals from allocating global resources to the United States.”