Democrats Want To Deny Federal Contracts To Companies That Relocate Overseas

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Peter Fricke Contributor
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Congressional Democrats advanced new legislation on Tuesday to discourage American companies from relocating overseas to reduce their tax bills.

The No Federal Contracts for Corporate Deserters Act would deny federal contracts to any company that relocates overseas if more than 50 percent of its shareholders are in the U.S. and it has no “substantial business opportunities” in the country to which it relocates.

Under current law, companies are only denied access to federal contracts for relocating overseas if more than 80 percent of shares are held in the U.S.

The bill is being sponsored in the Senate by Illinois Democratic Sen. Dick Durbin and Michigan Democratic Sen. Carl Levin; and in the House by Connecticut Democratic Rep. Rosa DeLauro and Texas Democratic Rep. Lloyd Doggett.

Durbin’s office did not respond to The Daily Caller News Foundation’s request for clarification of what constitutes “substantial business opportunities” under the legislation.

The four sponsors held a joint press conference on Tuesday morning to announce the bill, which they described as an effort to ensure that companies are not rewarded for leaving the country. (RELATED: Tax Avoidance is Like Renouncing Citizenship, Obama Says)

“Allowing companies to profit off of federal contracts paid for by U.S. taxpayers, while those very companies run from their U.S. tax responsibility,” Durbin said, increases the burden corporate inversion places on taxpayers.

DeLauro spoke in even stronger terms, saying, “For too long… the federal government has been subsidizing this bad behavior, by continuing to reward inverted companies with lucrative federal contracts.”

After avoiding their responsibility to help pay for the government services they enjoy, she elaborated, “suddenly, when federal contracts are being applied for, they are all as American as Uncle Sam once again.” (RELATED: Union Boss Demand Companies Show Patriotism, Pay More Taxes)

Doggett agreed, saying, “those dodging their fair share of taxes should not be rewarded with taxpayer-funded government contracts.”

In contrast, Levin portrayed the bill as merely a step in the right direction: “We ought to put a stop to all inversions,” he said, “but at the very least, we should stop these companies from receiving federal funding from the same American families who have to pick up the tax burden inverted companies shrug off.”

A bill Levin introduced in May better reflects his position on corporate inversions: The Stop Corporate Inversions Act of 2014 would treat corporations as domestic for tax purposes if at least 50 percent of stockholders are American, or if at least 25 percent of the company’s sales, employees, or assets are located in the U.S. (RELATED: U.S. Tax Code Causes Businesses to Flee Overseas)

Both bills are retroactive to May 8, 2014, which supporters consider necessary to prevent a flood of companies from rushing to finalize inversions while legislation is being debated.

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