Republicans, Democrats differ on solving US companies heading overseas for lower taxes

Global Business

While tax inversions are legal, they are proving costly for the U.S. government. A congressional committee estimates that Washington could lose nearly $20 billion over the next decade due to the practice.
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Both Republicans and Democrats in the U.S. Congress say something should be done to stop or control the number of inversions but they have different ideas on how to fix the problem. Inversions involve re-incorporating a company in a new country — like a U.S. firm leaving Texas and setting up shop in Mexico — to reduce their taxes.

Democrats want stricter rules for permitting inversions whereas Republicans want to de-incentivize them by lowering the U.S.’s 35 percent corporate tax rate. In the meantime, there’s a scramble to get inversions done before the rules change.

For more on corporate tax games, CCTV America spoke to Alan Viard, a resident scholar at the American Enterprise Institute. He focuses on federal tax and budget policy.