Dick Durbin is trying to stop Monsanto from moving its headquarters overseas to cut down on U.S. taxes.
The Illinois Democrat on Monday issued a new call for legislation to stop so-called corporate inversions after it was revealed Monday that the seed-maker, already controversial on the American Left for its development of genetically modified crops, would seek to move its headquarters to the United Kingdom in a deal with Swiss rival Syngenta.
“It’s clear that Monsanto — a company that has prospered and expanded in large part due to U.S. taxpayer-funded programs and services — intends to reincorporate overseas as part of its proposed acquisition of Syngenta in order to avoid paying U.S. taxes,” Durbin warned Monday afternoon.
“Hundreds of millions of dollars that could be invested in the infrastructure, education and research that companies rely on will be lost if Monsanto is allowed to go through with this corporate inversion scheme,” Durbin added.
He had previously warned that Monsanto, headquartered in St. Louis, might try to move its headquarters out of the U.S. in its attempted merger with Syngenta.
Those fears were validated on Monday when Syngenta revealed that Monsanto proposed moving the merged company’s headquarters to the U.K. to avoid some U.S. taxes and giving the new business a new name. Syngenta has twice rejected the roughly $45 billion proposed deal.
Durbin is among the Democrats who have proposed legislation that would stop such deals. It would require that any company formed out of a merger between a U.S. business and an overseas corporation be at least 50 percent owned by the shareholders of the foreign company.
President Obama’s Treasury Department took administrative action in September of last year to prevent inversions, proposing rules to undercut the economic benefits of the maneuvers.
Although the rules led to some businesses canceling proposed deals, Treasury Secretary Jack Lew has warned that only legislation can solve the underlying problem.
The U.S. has the highest corporate income tax rate among its developed peers, and, unlike most advanced economies, taxes businesses on income earned abroad.
By moving their headquarters to low-tax countries that do not tax businesses on foreign earnings, U.S. multinationals can lower their tax bill on international earnings. Lew has called for comprehensive tax reform to address the underlying issues.
