K Street lobbyists are brushing aside efforts in Congress to keep corporations from slashing their tax bill by “inverting” to a foreign address.
Finance Committee Chairman Ron WydenRon WydenSenate passes college anti-Semitism bill Overnight Finance: Trump takes victory lap at Carrier plant | House passes 'too big to fail' revamp | Trump econ team takes shape Senate Dems: Force Cabinet nominees to release tax returns MORE (D-Ore.) has said he would seek to limit that practice and would make any legislative fix retroactive to this month.
Wall Street clearly took notice; Pfizer’s stock price dipped after Wyden first mentioned trying to tackle inversions.
Pfizer, which saw a “final” offer rejected by AstraZeneca on Monday, is perhaps the best-known case, though a string of other corporations have also suggested an interest in making deals that would allow them to be based outside the United States.
But tax lobbyists, while saying they don’t totally count Wyden out, stress that the Finance chairman has a couple of big obstacles in his way, despite the move by prominent Democrats to release legislation Tuesday dealing with inversions.
For starters, lobbyists point to the general gridlock in Washington that has imperiled legislation such as tax reform, and the election-year pressures that are making it hard for lawmakers to work together.
Along those same lines, lobbyists note that Wyden has yet to get the top GOP tax writers on Capitol Hill, House Ways and Means Committee Chairman Dave Camp (Mich.) and Sen. Orrin HatchOrrin HatchMnuchin's former bank comes under scrutiny Trump’s economic team taking shape Huntsman considering run for Senate in 2018 MORE (Utah), to join his efforts.
“Bernie SandersBernie SandersFive things to watch for in the DNC race Sanders: I have little hope Trump will keep promises Democrats offer double-talk on Veterans Affairs MORE might as well have made the threat,” one tax lobbyist said, referring to the liberal Vermont senator. “It’s great that one leader of a tax-writing committee is stating his views, but that doesn’t have the same authority as a bipartisan, bicameral statement does.”
Hatch, the top Republican on the Finance panel, and Camp have both said they think inversions are a problem. But the two Republicans also believe the only real way to solve the issue is by reducing the incentive for corporations to move abroad.
The best way to do that, they say, is by overhauling the tax code and reducing the U.S.’s top corporate tax rate — currently at 35 percent, the highest in the industrialized world.
“I share my colleague’s concerns about the number of inversions that have taken place over the last few years,” Hatch said on the Senate floor last week. “However, I do not believe that imposing confusing and arbitrary retroactive restrictions on U.S. companies is the answer.”
Wyden has said he wants to work with Hatch on inversions, and noted in an interview with Bloomberg Television last week that he wanted to address them as part of tax reform.
“I want to make sure that people understand that there are real consequences for abandoning the United States,” Wyden told reporters last week.
Another lobbyist pointed out Congress struggled to get legislation across the finish line the last time it started to examine the matter more than a decade ago, even with bipartisan support.
Sen. Chuck GrassleyChuck GrassleyDrug pricing debate going into hibernation GOP leaders host Trump's top deputies Key Republican wants details on Ohio State attacker MORE (R-Iowa) and former Sen. Max BaucusMax BaucusThe mysterious sealed opioid report fuels speculation Lobbying World Even Steven: How would a 50-50 Senate operate? MORE (D-Mont.), then the leaders of the Finance Committee, teamed up for offshore tax legislation, and then-House Ways and Means Committee Chairman Bill Thomas (R-Calif.) also took an interest.
“The problem Wyden has is he can talk big, but he doesn’t have Hatch, and he doesn’t have Camp,” the lobbyist said.
“If companies are well advised by people who have actively been involved in this before, they should be hearing, ‘If this is something that’s important to you, do it now.’ ”
Sen. Carl LevinCarl Levin'Nuclear option' for Supreme Court nominees will damage Senate McCain's Supreme Court strategy leads to nuclear Senate The Fed and a return to banking simplicity MORE (D-Mich.) is leading the charge on inversions this time around, saying last week that he planned to introduce legislation on Tuesday. Rep. Sandy Levin (Mich.), the top Democrat at Ways and Means and the senator’s brother, plans to introduce the same measure in the House.
Sen. Levin’s bill would be modeled after President Obama’s proposal to combat inversions, and would essentially increase the amount of foreign ownership a merged company must have to move its legal address.
The current minimum rate is 20 percent; Levin and Obama propose bumping that up to 50 percent. Wyden has expressed support for that approach as well.
Sen. Levin, who is not seeking reelection this year, added last week that his measure would include a two-year moratorium on inversion to allow policymakers time to address the matter through tax reform.
“I’m just so frankly tired of tax reform being a looming presence as a reason not to do things,” the senator told reporters.
Wyden has said he supports Sen. Levin’s efforts, but the Michigan Democrat didn’t sound confident last week that the Finance chairman would co-sponsor his bill.
Still, Wyden has said he “wanted to serve notice to all who are following this that I’m going to do everything I can as the chair of the committee” to back date a legislative fix for inversions to this month.
One Wall Street official told The Hill Wyden’s comments had left some corporate interests wary of the political heat that comes with inversions, even if they’re not sure that legislation is coming soon.
But for others, the official said, Wyden’s comments only intensified efforts on the matter.
One tax lobbyists said the disconnect between Washington and New York could be feeding Wall Street’s concerns.
“I don’t think people who are well-informed are going to worry about it. People in New York feel like Washington’s a foreign land, so it may influence their thinking,” the lobbyist said.