Exit tax proposed for inverting companies

U.S. TreasuryTwo Senate Democrats want to force U.S. companies to pay an exit tax on any profits held overseas if the companies decide to reincorporate abroad to cut their tax bills, the latest in a slew of proposals to stem such “inversion” deals.

Senators Sherrod Brown and Dick Durbin on Friday released details of a bill that would require foreign earnings that have not been repatriated, or brought into the United States, to be taxed as income at the point when a U.S. company inverts.

Democratic lawmakers want to take immediate steps to slow or stop a wave of inversions that threaten to undermine the U.S. corporate tax base. In these deals, a U.S. company typically buys a foreign rival, then locates the tax domicile of the combined entities abroad to escape higher U.S. taxes.

“Everyone knows that before you leave a restaurant you have to settle your tab,” Brown, of Ohio, said in a statement. “Corporations shouldn’t get to play by different rules.”

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