How to Stop U.S. Firms from Moving Overseas for Tax Savings

“Inversion” is the term-of-the-moment for the practice of American corporations reincorporating overseas to lower their U.S. tax bills. In this business strategy, American companies buy up foreign firms with the goal of reincorporating in countries like Ireland and the Netherlands where corporate taxes are lower than in the U.S. Inversion is becoming so common that Treasury Secretary Jacob Lew has asked Congress to take immediate action to put an end to it. What is really needed is comprehensive tax reform that would lower U.S. business tax rates, eliminate convoluted loopholes intended to mitigate it, and make the tax code simpler and more fair. Such a major change might even convince U.S. companies that it’s worth it to stay home to carry out their business.

John Howell, Editorial Director