Reps. Dave Camp and John Boehner, lining their pockets through tax inversions.
Congressional Democrats have
jumped on the issue of tax inversions, introducing legislaton that would curb the practice by which American companies avoid hefty corporate taxes by buying a foreign company and then relocating their headquarters there. Needless to say, Republicans in Congress have been refusing to act on the issue. But a new
report from Bloomberg news might force them to reconsider.
While U.S. House Speaker John Boehner and Ways and Means Committee Chairman Dave Camp have resisted calls for a crackdown on companies adopting overseas addresses to pay lower taxes, both have made money off one of the deals. They also have investments at risk of losing value because of government action.
The two lawmakers reported the sale of stock in Covidien Plc within nine days of Medtronic Inc. saying it was planning a takeover, an announcement that sent Dublin-based Covidien’s shares near a 52-week high. The deal, one of several that have sparked a national debate over U.S. corporate tax policy, would put the combined company’s headquarters in Ireland and reduce its tax rate. […]
According to an analysis of public disclosures, the lawmakers still hold Medtronic shares--and Camp bought additional stock after the medical-device maker announced the transaction. Those holdings, though only a small part of the two multimillionaires’ stock portfolios, give them an interest in the deal’s completion, along with their ability to influence the outcome.
As chair of Ways and Means, Camp is the lead House member on tax issues—every piece of legislation that would reform the tax system has to go through him and his committee. There's nothing illegal in these, or any other members owning these stocks, and spokesmen for both say that neither participated in any decision-making by the companies and that their investment portfolios are managed by investment advisors. But the optics of congressional leadership personally profiting from these companies that are dodging taxes is problematic, to say the least.
While congressional action isn't likely to happen on inversions anytime soon, the Treasury Department is exploring what options President Obama can take to crack down on the practice. There's a relatively simple option in current code that empowers the Treasury Department to largely prevent companies that perform a tax inversion from claiming tax deductions on money they loan to themselves. That would be a good first step.
