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Wednesday, October 16, 2002

U.S. Chamber Urges Congress to Reject Penalties on Offshore American Businesses

WASHINGTON, D.C. -- The United States Chamber of Commerce today urged the U.S. Congress to reject legislation that would penalize American businesses locating their headquarters offshore in an effort to compete with foreign companies that have an unfair tax advantage over U.S. companies.

"Penalizing American businesses -- that employ American workers and produce American products -- for creating an offshore headquarters will hurt the U.S. and help our foreign competitors,” said Martin Regalia, the U.S. Chamber's chief economist.  “If members of Congress are interested in helping American companies improve our economy, they should revisit the U.S. tax system that drives businesses offshore in the first place.”

The U.S. Chamber urges Congress to reject the short-term and counterproductive legislative measures such as proposals that would treat inverted corporations as if they were still domestic; impose “moratoriums” on corporate inversions or disregard the tax inversion for a predetermined period of time; treat inverted corporations’ property as being sold for fair market value on the date before the “move”; and deny the use of international tax treaty benefits.  The Chamber opposes a recent trend in Congress to include language in non-tax legislation that would bar federal contracts to certain inverted U.S. companies.

“At a time when we should be focused on strengthening our economy, election-year politics are clouding sound judgment,” Regalia said.  “It is a lose-lose proposition for Congress to force American corporations to either pay heavier taxes than foreign competitors, or forgo doing business with the U.S. government.  Our overriding goal should be to fashion a tax system that will attract businesses to the United States, rather than drive them away.”

The U.S. Chamber of Commerce is the world’s largest business federation representing more than three million businesses and organizations of every size, sector and region.

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