Calculating the exact tax revenue the U.S. Treasury loses when companies make acquisitions overseas is often daunting. But an estimate from nonpartisan congressional research suggests the U.S. could miss out on billions.
If the U.S. stopped corporations from moving overseas to gain tax advantages, it could raise an additional $19.46 billion over a decade, The Wall Street Journal reported. Researchers at the Joint Commission on Taxation based the estimate on past instances of reincorporation overseas for tax benefits, known as tax inversions.
Corporations can cut their U.S. tax bills through a variety of methods. Some choose to transfer pretax income from U.S. operations to foreign parent companies, the Journal said. Others will keep cash overseas, as it becomes taxable once it is brought to the U.S.