Dems: Don't repeal offshore tax rules

Dems: Don't repeal offshore tax rules
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Democrats on the House Ways and Means Committee are urging their colleagues to oppose a resolution that would repeal Obama administration rules aimed at curbing offshore tax deals.

"These regulations are intended to combat aggressive corporate tax planning techniques that, rather than serving an economic purpose, are used by some corporations to avoid taxes," the Democratic tax-writers wrote in a letter Wednesday to their colleagues.

The letter comes after Rep. Todd Rokita (R-Ind.) introduced a resolution last week to use the Congressional Review Act to disapprove of the rules, which the Treasury Department finalized in October. A vote on Rokita's resolution has not yet been announced, but in recent weeks, the House has approved several resolutions to undo recent Obama-era regulations.

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Treasury's rules are designed to limit the tax benefits of corporate "inversions" — transactions in which U.S. companies reincorporate overseas for tax purposes. The rules would recharacterize certain related-party debt as equity. 

When Treasury initially proposed the rules in the spring, both Republican and Democratic lawmakers had concerns that they would hurt business transactions that had nothing to do with inversions. But the Democratic lawmakers said that "Treasury made extensive revisions to its original draft in order to address these concerns."

If the rules are repealed, "Republicans in Congress will open the door to more companies renouncing their U.S. citizenship for tax purposes, while still reaping the benefits of doing business in America — a tax practice President Trump railed against on the campaign trail," the Democrats said.

Rokita said in a statement Wednesday that his resolution "will reduce the tax burden on Indiana firms and all American companies so they can grow our economy and create jobs."

The National Association of Manufacturers supports Rokita's resolution. The group said that Treasury's rules, even with revisions, would impose documentation, compliance and cost burdens on many manufacturers.