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Treasury Announces New Steps To Reduce Corporate Tax Dodges

The U.S. Treasury announced steps on Monday to reduce the number of American companies who are dodging taxes by moving their parent companies overseas.

"These transactions erode the U.S. tax base, unfairly placing a larger burden on all other taxpayers, including small businesses and hardworking Americans," Treasury said in a statement.

If you remember, this kind of business move — known as an inversion — came to the limelight recently when Burger King announced it was merging with the Canadian chain Tim Hortons. The new company, Burger King said, would be based in Canada.

As NPR's Jim Zarroli reported, the deal was forecast to save Burger King on its tax bill.

Today, Treasury announced two moves:

"Today's action eliminates certain techniques inverted companies currently use to gain tax-free access to the deferred earnings of a foreign subsidiary, significantly diminishing the ability of inverted companies to escape U.S. taxation. It also makes it more difficult for U.S. entities to invert by strengthening the requirement that the former owners of the U.S. company own less than 80 percent of the new combined entity. For some companies considering mergers, today's action will mean that inversions no longer make economic sense."

Treasury Secretary Jacob J. Lew said his agency will continue to look for ways "to close loopholes that allow some taxpayers to avoid paying their fair share."

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