The Trump administration is taking aim at an Obama-era regulation intended to prevent companies from avoiding U.S. taxes by shifting profits out of the country.
The United States is one of the only developed nations that taxes businesses on income earned around the world. That has prompted a growing number of companies to move their headquarters overseas, such as Canadian Tim Horton's acquisition of Burger King. It has also encouraged foreign companies to buy U.S. companies, such as when Belgium's InBev purchased Anheuser-Busch.
President Barack Obama attempted to turn the tide with a raft of sweeping regulations in April 2016. The rules helped scuttle a planned $52 billion deal between drugmaker Abbvie and an Ireland's Shire as well as the $150 billion megamerger between Pfizer and Allergan, also headquartered in Ireland.
Now, the Treasury Department is rethinking one of the most controversial of those rules, one that deals with "earnings stripping." That's when companies load up their U.S. operations with debt and move profits to foreign subsidiaries. Business groups have railed against it as executive overreach with expensive consequences. Under Obama, the Treasury Department estimated it would cost companies $285 million to comply with the regulation, but companies argue that number is too low.