3 Tax Loopholes Hillary Clinton Wants to Close
Hillary Clinton says that she wants to make the U.S. tax system fairer, and she has identified several provisions of the tax code that she argues favor the wealthy at the expense of the middle class. Below, we’ll look at three of the biggest tax loopholes that the Clinton plan aims to close.
1. Overseas corporate inversions
One of the most egregious practices among major companies in the past several years has been the corporate inversion. To do a corporate inversion, a U.S. company typically seeks to acquire a smaller company in another country that has lower corporate tax rates. The U.S. buyer then moves its tax home to the target company’s country, reducing its tax bill. Yet the buyer typically retains the bulk of its operations within the U.S., only technically shifting its domicile for tax purposes.
Already, the federal government has clamped down on corporate inversions, with the Treasury Department issuing regulations aimed at prohibiting repeated inversions and requiring that the acquiring and target companies be relatively close to each other in size. The regulations effectively killed a planned merger between Pfizer (NYSE:PFE) and Allergan (NYSE:AGN), in part because Allergan had made several acquisitions subject to the regulations and in part because Pfizer was so much larger than Allergan.
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