Democratic presidential candidate Hillary Clinton on Wednesday will unveil proposals to deter U.S. companies from shifting profits overseas, including an “exit tax” to penalize companies that perform so-called tax inversions, a campaign official said.
The exit tax would apply to companies like Pfizer that move abroad for tax advantages, said the official, who didn’t want to be named ahead of the official announcement. Another major part of Clinton’s plan will be announced Wednesday, when Clinton is due to appear in the first-in-the-nation caucus state of Iowa, the official said.
Clinton will also restate her support for raising, to 50 percent from 20 percent, the threshold for shares a U.S. company can transfer to a foreign owner to gain tax benefits, said the official. The Obama administration also backs raising the threshold.
Clinton has said Pfizer’s $160 billion deal with Allergan Plc, which will move the New York-based drugmaker’s tax address to Ireland, would hurt American taxpayers. The deal is expected to be completed by the end of next year, before a new president takes office.
Lawmakers in both parties have cited the deal as the latest example of the need for corporate tax reform in order to block what are known as tax inversions. In such deals, companies typically will keep their operational headquarters in the U.S., while being able to use profits previously kept overseas out of the reach of U.S. tax authorities, and lowering their overall rate.
Congressional Democrats have unsuccessfully sought legislation to crack down on inversions since the latest wave began in 2012 by companies including Burger King Worldwide Inc., Medtronic Inc., and Mylan Inc.
Republicans have resisted, arguing that a broader revamp of the tax code should take priority, though Congress hasn’t made progress. Republican presidential front-runner Donald Trump, the billionaire real estate mogul, has said Pfizer’s departure “is disgusting” and American politicians “should be ashamed.”
The U.S. has the highest corporate tax rate in the developed world, of 35 percent. The Associated Press reported earlier on Clinton’s proposals.