Dem. Senator Says CEO Daughter’s Business Move Should Be Illegal
West Virginia U.S. Sen. Joe Manchin said that the move his daughter’s company is making to avoid the U.S.’s high corporate tax rates should be illegal.
Manchin made his stance known, hesitantly, in an interview with National Journal reporter Ron Fournier.
Fournier reported last week that the Democratic senator’s daughter, Heather Bresch, who is CEO of the generic drug maker Mylan, announced that the company would be moving its headquarters to the Netherlands.
By renouncing its U.S. citizenship, Mylan would by taking advantage of a “tax inversion” loophole.
“I think basically inversion should be absolutely repealed,” said Manchin, adding that he has been “begging for” tax reform.
The move makes economic sense for Mylan given the tax benefits that the move will bring.
The Netherlands’ corporate tax rate is capped at 25 percent while the U.S.’s top rate is 35 percent, plus any taxes levied at the state level.
Mylan pays a 25 percent average tax rate here in the U.S. But after its overseas move, it expects to pay 21 percent in taxes during its first year, and rates in the teens several years in the future, according to the New York Times.
But Fournier pressed Manchin on the fact that a majority of Mylan’s revenue comes from Medicare and Medicaid.
“I’m happy to pass a piece of legislation [that] says if they’re…going to be a drug company that’s selling to Medicare/Medicaid, that they have to be a U.S. citizens? I’d vote for that today!” Manchin told Fournier.
Asked if that includes his daughter’s company, Manchin said: “Absolutely. Get ’em all! Don’t just pick and choose.”
Manchin’s concession did not come easily. Fournier initially pressed the senator over his failure to return phone calls ahead of its initial piece. He also quibbled over Mylan’s move by pointing out that it was among the last generic drug makers to take advantage of the inversion loophole.
Manchin also said that he will not take the lead on proposing a bill to outlaw inversion because he is not a member of the Senate’s Finance or Budget committees. “You usually don’t jump in somebody else’s bathwater,” he said.
The inversion issue has taken on renewed significance as the Obama administration recently pressed lawmakers to repeal the loophole. In the last decade, approximately 50 U.S. companies have invoked inversion by re-incorporating overseas, according to the Wall Street Journal.