Treasury Secretary Lew Speaks on Inversions
Key Topics & Takeaways
- Lew said the Administration plans to act on inversions soon, but that these efforts cannot substitute meaningful legislation.
- Lew gave an update on the economic recovery and said that companies still invest in the United States in spite of its tax code.
- The pace of inversion deals, in Lew’s view, has accelerated in recent months and legislation should be retroactive to May of this year.
- Based on Republican support for similar legislation that was signed into law by President George W. Bush, Lew thinks that inversion legislation should be bipartisan.
Speaker
- The Honorable Jacob J. Lew, U.S. Secretary of Treasury
Remarks
Secretary Lew discussed the importance of business tax reform to “level the playing field” and make the United States a more attractive place to invest.
He said the economy continues to strengthen and that policies put in place by the president after the crisis played an important role in the recovery. Lew said the United States economy has improved with sectors of the economy recovering, noting GDP gains and the economy being six percent larger than when the crisis began and 10 million new private sector jobs added in the last four months. Lew also highlighted that health care costs have risen by the lowest rate in 50 years and the budget deficit has been cut by more than half. With this in mind, Lew described tax reform as an important strategy and the U.S. as an important place to do business “in spite of its tax code.” Lew pointed to President Obama’s call on Congress to conduct tax reform.
Lew urged for simplifying the code, broadening the base, and keeping the top corporate rate at 28 percent in order to limit special interest loopholes. This strategy, according to Lew, would create an environment where business decisions are made for business reasons, not tax reasons. He also supported closing “unfair loopholes” which he said do not help the economy. Notably, Lew mentioned that the Administration’s plan and Chairman Dave Camp’s (R-Mich.) plan both include a one-time savings.
With regard to inversions, Lew said the pace of deals has accelerated in recent months. He distinguished between “genuine cross border mergers” and a “change in residence for purely tax purposes.” According to Lew, these inversion deals erode America’s corporate tax base and said the best way to address inversions is through comprehensive business tax reform. While business tax reform must be done, Lew indicated that Congress cannot wait to complete business tax reform before addressing inversions. In Lew’s view, the President’s proposal ends incentives to do inversions. He added that proposals on the Hill should have bipartisan support based on the precedent of retroactive legislation that was championed by Republicans in the Senate and signed under President George W. Bush.
In conclusion, Lew called for action that would apply to any deal after May of this year and said the Administration plans to take action soon, but that it will not substitute meaningful legislation. Only the law, Lew said, can change the way these business decisions are made and tax reform is still needed.
For more information on this event, please click here.
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Key Topics & Takeaways
- Lew said the Administration plans to act on inversions soon, but that these efforts cannot substitute meaningful legislation.
- Lew gave an update on the economic recovery and said that companies still invest in the United States in spite of its tax code.
- The pace of inversion deals, in Lew’s view, has accelerated in recent months and legislation should be retroactive to May of this year.
- Based on Republican support for similar legislation that was signed into law by President George W. Bush, Lew thinks that inversion legislation should be bipartisan.
Speaker
- The Honorable Jacob J. Lew, U.S. Secretary of Treasury
Remarks
Secretary Lew discussed the importance of business tax reform to “level the playing field” and make the United States a more attractive place to invest.
He said the economy continues to strengthen and that policies put in place by the president after the crisis played an important role in the recovery. Lew said the United States economy has improved with sectors of the economy recovering, noting GDP gains and the economy being six percent larger than when the crisis began and 10 million new private sector jobs added in the last four months. Lew also highlighted that health care costs have risen by the lowest rate in 50 years and the budget deficit has been cut by more than half. With this in mind, Lew described tax reform as an important strategy and the U.S. as an important place to do business “in spite of its tax code.” Lew pointed to President Obama’s call on Congress to conduct tax reform.
Lew urged for simplifying the code, broadening the base, and keeping the top corporate rate at 28 percent in order to limit special interest loopholes. This strategy, according to Lew, would create an environment where business decisions are made for business reasons, not tax reasons. He also supported closing “unfair loopholes” which he said do not help the economy. Notably, Lew mentioned that the Administration’s plan and Chairman Dave Camp’s (R-Mich.) plan both include a one-time savings.
With regard to inversions, Lew said the pace of deals has accelerated in recent months. He distinguished between “genuine cross border mergers” and a “change in residence for purely tax purposes.” According to Lew, these inversion deals erode America’s corporate tax base and said the best way to address inversions is through comprehensive business tax reform. While business tax reform must be done, Lew indicated that Congress cannot wait to complete business tax reform before addressing inversions. In Lew’s view, the President’s proposal ends incentives to do inversions. He added that proposals on the Hill should have bipartisan support based on the precedent of retroactive legislation that was championed by Republicans in the Senate and signed under President George W. Bush.
In conclusion, Lew called for action that would apply to any deal after May of this year and said the Administration plans to take action soon, but that it will not substitute meaningful legislation. Only the law, Lew said, can change the way these business decisions are made and tax reform is still needed.
For more information on this event, please click here.