U.S. Treasury moves aggressively to curb corporate tax inversions

Treasury Secretary Jack Lew wants to quash corporate tax inversions
(Image credit: Philippe Lopez/AFP/Getty Images)

Late Monday, the U.S. Treasury Department and Internal Revenue Service announced new rules to quash corporate inversions, where an American company buys a foreign rival then moves the company's address abroad to sharply lower their U.S. taxes. It is the third set of Treasury rules aimed at corporate inversions, but this pair of changes — affecting a tax maneuver called earnings stripping and also serial inverters — is seen as the most effective yet. "It's going to be a major impediment. They're pretty much taking all of the juice out of inversions," tax analyst Robert Willens tells The Wall Street Journal. "They've addressed literally every benefit that one attempted to gain from an inversion and shut them all down systematically."

The rules apply to all deals that close after Monday, and the first victim could be the largest proposed corporate inversion yet, Pfizer's $160 billion takeover of Dublin-domiciled rival Allergan. Allergan's shares fell 21 percent in after-hours trading. That merger has become an object of criticism on the presidential campaign trail, a rare area of agreement between Hillary Clinton and Donald Trump.

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Peter Weber, The Week US

Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.