[Congressional Record Volume 160, Number 121 (Wednesday, July 30, 2014)]
[Senate]
[Pages S5142-S5143]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      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

[[Page S5143]]

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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