Lew Says Business-Tax Revamp Best to Curb Inversions

Aug 22, 2014 10:33 am ET

(Corrects Maya MacGuineas affiliation in second paragraph of article published Aug. 21.)

Aug. 21 (Bloomberg) -- U.S. Treasury Secretary Jacob J. Lew said the best way to deal with corporate inversions is through a comprehensive revamp of business taxation, according to a statement from the department.

Lew’s comments came in a meeting with policy specialists today in Washington, including Alice Rivlin of the Brookings Institution, Maya MacGuineas of the Committee for a Responsible Federal Budget, and Jared Bernstein of the Center on Budget and Policy Priorities, the Treasury said.

Lew’s comments today echo his previous statements on the issue, which emphasized reducing tax rates and making it harder for U.S. companies to shift profits overseas. The Treasury Department is also working on options for regulatory steps to curb inversions or make them less attractive.

During the meeting, Lew “expressed the same view he’s expressed publicly about the problem of inversions,” Bernstein said in an interview after the meeting.

Treasury is developing a plan on inversions and hasn’t made any decisions yet, said another person participating in the meeting. If Congress doesn’t revamp business-tax law, the department wants to find another approach, said the person, who asked not to be named since the meeting was closed.

In a recognition that such initiatives probably won’t become law soon, the administration is advocating retroactive legislation to prevent U.S. companies from changing their tax address by purchasing a smaller foreign company.

That proposal would penalize eight pending deals, including inversions by Medtronic Inc. and AbbVie Inc.

In inversions, U.S. companies take a foreign address for tax purposes, increasing their access to their own offshore profits and making it easier to reduce their future U.S. taxes.

According to the Treasury Department, other people at the meeting included Austan Goolsbee, former economic adviser to President Barack Obama, and Leslie Samuels, a partner at Cleary Gottlieb Steen & Hamilton LLP who is a former Treasury Department official.