Statement from EPI Director of Tax and Budget Policy Thomas L. Hungerford

The Treasury Department announced yesterday that they would issue rules limiting corporate inversions—completed on or after September 22, 2014—that are structured to avoid the purposes of U.S. tax law. This move is a good and necessary start toward discouraging corporate inversions, which cost U.S. taxpayers billions in lost revenue.

Treasury’s actions, while a solid first step, should not be viewed as a substitute for legislation to strengthen the anti-inversion rules in the tax code. Ultimately, Congress must act to protect our tax base. But to be clear, these legislated protections against erosion of the tax base should not be held hostage to pursuit of comprehensive corporate income tax “reform”—they can and should go first in line.

Treasury also requested comments on strengthening the rules against earnings stripping—a tax avoidance trick to get U.S. profits into a tax haven without paying U.S. taxes.

Hungerford is the author of Policy Responses to Corporate Inversions: Close the Barn Door Before the Horse Bolts, which looks at the reasons why an increasing number of corporations are inverting or planning to invert, and discusses policy solutions to halt the exodus of U.S. firms.

Also by Thomas Hungerford:

Why are so many U.S. Corporations Trying to Invert?

Brief but Sad History of Selected Corporate Inversions

Hungerford is available for interviews.