Hillary Clinton is expanding on her plans to crack down on corporate inversions, the controversial scheme where companies move their legal address abroad for tax reasons. Clinton rolled out a plan Wednesday in Iowa to curb a related technique dubbed earnings stripping.
“Corporations that use tax games like these end up paying a lot less to the U.S. Treasury,” she said at town hall in Waterloo, saying her plan would raise about $80 billion in increased tax revenue over 10 years. “Fundamentally this is not only about fairness. This is about patriotism. I want to raise the cost to corporations that try to get out of paying their fair share.”
Earnings stripping includes a range of techniques companies use to limit their exposure to U.S. taxes, including moving their profits overseas to countries with lower tax rates while moving debt to the U.S.
Clinton's comments are part of the Democratic presidential front-runner's larger effort to limit inversions, including the pending merger of drug giants Pfizer and Allergan. The merger would move the combined company's legal home to Ireland, which has lower tax rates, even though most executives and operations would remain in the U.S.
All three Democratic presidential candidates, along with Republican Donald Trump, oppose that merger.
Clinton has vowed to crack down on inversions in general, calling on Congress to do so and proposing an “exit tax” on untaxed overseas earnings before corporations are allowed to give up their American residence. She said that if Congress refuses to act, she believes executive action can address the issue as well.