Statements on Introduced Bills and Joint Resolutions

Floor Speech

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By Mr. LEVIN (for himself, Mr. DURBIN, and Mr. REED):

S. 2704. A bill to prohibit the award of Federal Government contracts to inverted domestic corporations, and for other purposes; to the Committee on Homeland Security and Governmental Affairs.

Mr. LEVIN. Mr. President, earlier today I, along with Senator Dick Durbin and Senator Jack Reed, introduced the No Federal Contracts for Corporate Deserters Act. Our bill will put a stop to companies that renounce their U.S. citizenship but come back to try to seek taxpayer funded government contracts. There is an existing law on the books that is supposed to ban Federal contracts with inverted corporations, but just like with the tax code, after about a decade of lawyers looking for loopholes in the law, a number of corporations have found them. This bill would bring that ban up-to-date.

Over the last few months, there has been a growing rush of U.S. corporations seeking to swear off their U.S. citizenship and move their mailboxes, for tax purposes, to a low-tax jurisdiction. I don't think that is right, and it is time we put a stop to it, which we can do by passing the Stop Corporate Inversions Act I introduced 2 months ago with 22 cosponsors.

Most Americans agree with us that taxpayer dollars shouldn't be used for contracts with companies that move their addresses abroad to dodge U.S. laws. And because of that, Congress has passed a series of restrictions on contracting with inverted corporations over the last decade. We passed one in 2002, and another in 2006 and 2007. Since fiscal year 2008, a government-wide provision has been included in every annual appropriations bill banning contracts with inverted corporations.

Our bill would strengthen that ban by closing a number of loopholes in the current law. Those loopholes have allowed some inverted corporations to continue collecting revenue from American taxpayers, while at the same time, shifting their tax burden onto those same American taxpayers. Our bill also makes the existing ban, which has been included in annual appropriations bills, permanent.

Some may say that the real reason for inversions is that our tax rate is too high. It is true the top corporate rate is 35 percent. But the effective tax rate--what corporations really pay--is about 12 percent. When companies can go to places like Ireland or the Caribbean and negotiate sweetheart deals to pay little or no taxes, there will always be tax incentives for companies to abandon their country instead of paying their tax bill, no matter what our tax rate is.

Some may say that we should wait for tax reform to address this issue. There are two reasons why we shouldn't. First, if it happens at all, tax reform is months or years away; these inversions are happening now. Second, this is a bill about contracting. This bill doesn't amend the tax code. I expect it will be referred to the Homeland Security and Government Affairs Committee, not to the Finance Committee. So even Senators who believe that fixing the tax inversions problem should wait until comprehensive tax reform should be able to support this bill.

In the past, in similar circumstances, Congress has chosen to act--overwhelmingly, and in a bipartisan fashion. This should not be a partisan issue. This is about fairness. It is simply unfair to businesses who don't invert to have to compete with companies that do invert. This is about putting American families who work hard and pay their share. We shouldn't sacrifice the interests of those families. We shouldn't ask them to send their hard-earned tax dollars to contractors who skip out on their tax obligations. I look forward to working with my colleagues to move this bill forward.

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