Lew meets with lawmakers on offshore tax rules

Lew meets with lawmakers on offshore tax rules
© Michael Bonfigli/Christian Science Monitor

Treasury Secretary Jack LewJacob (Jack) Joseph LewOvernight Finance: US reaches deal with ZTE | Lawmakers look to block it | Trump blasts Macron, Trudeau ahead of G-7 | Mexico files WTO complaint Obama-era Treasury secretary: Tax law will make bipartisan deficit-reduction talks harder GOP Senate report says Obama officials gave Iran access to US financial system MORE met with House Ways and Means Committee members Wednesday as the Obama administration works to finalize rules aimed at curbing offshore tax deals.

The rules, proposed in April, have drawn concerns from business groups and lawmakers on both sides of the aisle. They would treat some inter-company debt as equity.

The rules were designed to take aim at a tax-avoidance strategy called "earnings stripping" that is used by companies that participate in "inversions" — transactions in which U.S. companies move their headquarters overseas to lower their taxes. However, stakeholders say the proposal is too broad and would hurt routine businesses transactions.

A Treasury spokesperson said that “Treasury has engaged extensively with a wide range of stakeholders regarding our proposed earnings stripping regulations," and the meeting with Ways and Means members was part of that process.

House Ways and Means Committee Chairman Kevin BradyKevin Patrick BradySmaller tax refunds put GOP on defensive Key author of GOP tax law joins Ernst and Young Lawmakers beat lobbyists at charity hockey game MORE (R-Texas) called the meeting "constructive."

"The secretary shares the view it’s important to get this right rather than rush it," he said.

Brady said that his message to Treasury is that the department should slow down and take stakeholders' comments seriously. He said he thinks Treasury should issue revised rules in the form of proposed rules so that stakeholders can provide more feedback before they are finalized.

Brady also said he thinks that a "true cost-benefit analysis" of the rules should be conducted. 

"This is a major rule, with major costs," he said. "You have to make sure that you’re not doing more harm than good in the rule." 

Rep. Sandy Levin (D-Mich.), the top Democrat on the Ways and Means Committee, said that Lew "made it clear they're taking a hard look at all the issues."

"I have full confidence that they're going to do what they say they're doing," he said. "And that is, look at all the issues, look at all the points of view and come forth with a regulation that is reasonable."

Rep. Lloyd Doggett (D-Texas) said in a statement after the meeting that "Treasury should get it right, but it’s time to get it done."

"So many lobbyists are seeking rejection not refinement," Doggett said. "None of this rulemaking would have been necessary had Congress done its job regarding those corporations that renounce their American citizenship and change their address to evade their share of our national security costs.”

Doggett criticized some Ways and Means members for being "eager to encourage Treasury to do as little as possible, as late as possible to address offshore tax shenanigans." 

Lew previously met with members of the Senate Finance Committee in July, and other Treasury officials also met with members of the congressional tax-writing committees that month.

updated at 4:16 p.m.