Durbin, Reed, Delauro Introduce American Business For American Companies Act

Durbin, Reed, Delauro Introduce American Business For American Companies Act

WASHINGTON - Today, U.S. Senate Democratic Whip Dick Durbin (D-IL), U.S. Senator Jack Reed (D-RI), and U.S. Representative Rosa DeLauro (D-CT-03) today reintroduced the bicameral American Business for American Companies Act, legislation that would extend the year-to-year government wide ban on federal contracts for inverted corporations by moving it out of the annual appropriations process and into permanent law.

Corporate inversions allow U.S. companies to shift their corporate citizenship from the United Sates to a low-tax foreign jurisdiction while keeping their executive and headquarters in the United States. This is accomplished by merging with a foreign company that can be as little as one-fifth of the size of the U.S. corporation yet results in large, permanent tax breaks. Unlike other tax loopholes that can be closed on a year-to-year basis, a tax inversion is a permanent change in a corporation's structure.

"When companies choose to shirk their fair share of taxes by inverting, they shouldn't be rewarded with a government contract," Durbin said. "It's time we closed this tax loophole once and for all."

"Congress must close inversion loopholes to protect American taxpayers and businesses that pay their fair share and ensure we can meet our national defense, infrastructure, and workforce needs. This legislation would be an important step towards ending the corporate shell game that has allowed some companies to shift their address abroad in order to reduce their taxes while remaining in the U.S. and increasing the financial burden on American taxpayers," said Reed.

"We cannot continue to allow corporations to pretend that they are American companies, reaping the benefits this country has to offer, all while claiming to be another nationality when the tax bill comes," said DeLauro. "Those corporations are cheating the American people out of revenue that could make a real difference in the lives of children and families, so that they can dodge taxes and gouge prices."

The Senate legislation is also cosponsored by U.S. Senators Tammy Duckworth (D-IL), Bernie Sanders (I-VT), and Sheldon Whitehouse (D-RI).

In 2007, after a GAO report found that four of the top 100 federal contractors were inverted corporations, Congress included a government-wide ban on federal contracts with inverted corporations in annual appropriations bills. That restriction has been extended every year and remains in effect. But just like with the tax code, corporations have found loopholes in the contracting restriction. In 2014, one estimate found that inverted corporations received nearly $1 billion in federal contracts over a five-year period.

The American Business for American Companies Act would extend the year-to-year ban by moving it out of the annual appropriations process and into permanent law. The legislation maintains the exception in existing law allowing an agency head to waive these requirements if doing so is in the interest of national security. It also eliminates loopholes in the current law that have allowed inverted corporations to bid for and win federal contracts despite the ban currently in place. The legislation would close a loophole used by dozens of companies to move their tax address overseas while qualifying for taxpayer-funded government contracts. The legislation also provides authority for the agencies to prevent subcontracts with inverted corporations and joint ventures that use subcontracts and joint ventures to evade the ban.

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