The Obama administration cracked down today on so-called tax inversions, aiming to curb a spate of American companies shifting overseas in an attempt to shirk paying US taxes. New regulations from the Treasury Department will make inversions less lucrative by barring creative techniques that companies use to lower their tax bill. Additionally, the US will make it harder for companies to move overseas in the first place by tightening the ownership requirements they must meet. "This action will significantly diminish the ability of inverted companies to escape US taxation," Treasury Secretary Jacob Lew said. He added that for some companies considering inversions, the new measures would mean inverting would "no longer make economic sense."
In an inversion, a US business merges with or is acquired by a foreign company in a country with a lower tax rate. President Obama has denounced inversions as unpatriotic and has urged Congress to stop them. Obama applauded the Treasury for taking steps to reverse the trend of companies seeking to "exploit this loophole" to avoid paying their fair share in taxes. Yet he said he was still calling on Congress to pursue broader tax reform that would reduce the corporate tax rate, close loopholes and make the tax code simpler. "While there's no substitute for congressional action, my administration will act wherever we can to protect the progress the American people have worked so hard to bring about," Obama said in a statement. (Read more Obama administration stories.)