Obama wants action to halt the rush of U.S. companies moving abroad

|By:, SA News Editor

The Obama administration is proposing a ban on “inversion deals,” retroactive to May 2014, in which U.S. companies buy foreign ones and move corporate headquarters abroad to escape U.S. tax laws.

Inversion deals are more common among drug and manufacturing companies that earn much of their income overseas or have assets such as patents that are held offshore; shares of companies with pending deals who fell today on the proposal included Shire (NASDAQ:SHPG), AbbVie (NYSE:ABBV), Auxilium Pharma (NASDAQ:AUXL) and QLT (NASDAQ:QLTI).

In an unprecedented move for a U.S. retailer, Walgreen (NYSE:WAG) also is weighing leaving U.S. shores, a move that could help lower its U.S. tax bill and save the company hundreds of millions of dollars per year.

With the pace of inversions picking up, many in Washington are critical of the practice but they disagree on what to do about the trend: stop the deals cold via a one-off bill or pass a broad tax overhaul that would lower the 35% corporate tax rate.