Political Class Idle as Tax Inversions Continue
12:00 AM, Jun 28, 2014 • By IRWIN M. STELZER
So despite Wyden’s statement, and I am told that he has lost interest in not “sitting idly by,” there is little significance to the sound and fury of senators who are always upset at legal solutions to uncompetitively high taxes. They are most likely to do not much and certainly not soon. Yes, there is a bill in the Senate that would limit inversions to mergers in which the foreign partner is equal in size to the American acquirer, rather than at least 20 percent as large as the law now stands. But my guess is that economist Douglas Holtz-Eakin, president of the American Action Forum, a Washington think tank, and former adviser to John McCain during his 2012 campaign for the presidency, has it right. Holtz-Eakin, as well or better informed about congressional thinking than anyone in the capital, tells me that some Democrats would like to end inversions, but they have no chance of getting the sixty votes they would need in the Senate. And if they somehow did, the bill would be killed in the Republican-controlled House, where the leadership prefers reducing the corporate tax rate to something like 25 percent as part of an overall reform of the tax code, expected after the November elections.
So there will be more inversions. Whether the economic effect of the revenue lost to the Treasury will be more than offset by an accelerated repatriation of foreign earnings now sitting idly in foreign banks will soon be the subject of more than few scholarly papers.
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