Orrin Hatch: “Before I begin, I would like to take a moment to address some proposals we have been hearing about in the tax space.…”

“Before I begin, I would like to take a moment to address some proposals we have been hearing about in the tax space. Corporate Taxation Some of us--myself included--were very concerned to hear the other day that a very big American corporation announced plans to merge with a somewhat smaller but still large UK corporation and then have the combined entity domiciled in the United Kingdom. Apparently, a desire to escape the high U.S. corporate tax was part of the motivation for the merger. This type of transaction where a U.S. corporation escapes the U.S. tax net is sometimes referred to as an inversion. Broadly speaking, there are two different ways to address the problem of inversions. The first way is to make it more difficult for a U.S. corporation to invert. Just today we have read accounts of Members of Congress who propose doing just that. The second way is to make the United States a more desirable location to headquarter one's business. I believe the latter is by far the better way. That would mean lowering the corporate tax rate and having a more internationally competitive tax code. Under current law, U.S. corporations are taxed on their worldwide income, but foreign corporations are subject to tax only on income arising from the United States itself. In other words, we subject our own corporations to a worldwide tax system, while subjecting foreign corporations to a territorial tax system. It is strange that the U.S.…”