July 22,2014

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Wyden Calls for Swift Action to End Corporate Inversions

Finance Chairman Says Comprehensive Tax Reform Urgently Needed to Boost Economy

WASHINGTON –Senate Finance Committee Chairman Ron Wyden, D-Ore., at a hearing today said the Finance Committee must take decisive action to end corporate inversions – the practice of U.S. companies moving their headquarters abroad in pursuit of lower tax rates. Wyden also said inversions represent a clear sign that the U.S. tax code needs comprehensive reform to keep America competitive and create good-paying jobs.

“This wave of inversions may be good for shareholders, investment bankers and private equity firms, but they are bad for America,” Wyden said.  “The Finance Committee must respond now, on a bipartisan basis, to plug the inversion loophole. America’s free enterprise system works best when there’s a level playing field, and inversions further distort the free market by bestowing tax favors on some at the expense of the American taxpayer.”

Corporate inversions have become a growing problem in recent years, with 14 completed or announced deals in 2014 alone. The Joint Committee on Taxation has estimated nearly $20 billion in revenue will be lost over ten years due to inversions.

Wyden said he hopes to see Congress take up bipartisan legislation to address the issue in the very near future. Wyden also said taking swift action to close the inversion loophole will give Congress the space needed to work on a comprehensive tax reform plan, the best step for preventing issues such as inversions from occurring in the first place.

“The American tax code is an anti-competitive mess,” Wyden said. “Comprehensive tax reform needs to happen soon. The longer we wait, our tax base will keep eroding, cash piles overseas will continue to grow, and investment dollars will be driven overseas. After the inversion loophole is closed, this committee will pursue reform that creates a level playing field for U.S. companies and workers in the global economy. That means a fair and simple code designed to help businesses grow.”

Witnesses at today’s hearing included Robert Stack, deputy assistant secretary for international tax affairs at the Treasury Department; Pascal Saint-Amans, director of the Centre for Tax Policy and Administration at the Organisation for Economic Co-operation and Development (OECD); Mihir Desai, professor of finance at the Harvard Business School and professor of law at Harvard Law School; Peter Merill, director of the National Economic and Statistics Group at PricewaterhouseCoopers; Leslie Robinson, associate professor of business administration at the Tuck School of Business at Dartmouth College; and Allan Sloan, the senior editor at large at Fortune magazine. Their testimony is available here.

The full text of Wyden’s statement is available here. Watch Wyden’s opening statement here.