Cant and the Inconvenient Truth About Corporate Inversions

12 Pages Posted: 1 Aug 2012

See all articles by Bret Wells

Bret Wells

University of Houston Law Center

Date Written: July 23, 2012


The article argues that inversion transactions and inversion benefits are still available and are being pursued even after the enactment of section 7874. That section obscures the fundamental design flaws of the US tax system without solving the underlying defects. The inversion transactions that have occurred since the enactment of section 7874 prove that Congress should reform the U.S. international tax regime, but Section 7874 obscures this proof. By providing plausible deniability regarding the design defects of current law, section 7874 allows policymakers to avoid facing an inconvenient truth about the existing U.S. international tax regime while allowing the inversion planning to continue under the radar. Valuable time has been wasted. It is now time for Congress to address the underlying policy flaws that provide significant savings for multinationals that are nominally classified as foreign-status corporations. The post-section 7874 inversion record continues to provide the evidence for this needed reform whether or not policymakers want to see it.

Keywords: Territorial Tax Regime, Corporate Inversions, Expatriations, Section 7874, International Tax Reform, Tax Competitiveness

Suggested Citation

Wells, Bret, Cant and the Inconvenient Truth About Corporate Inversions (July 23, 2012). Tax Notes, Vol. 136, p. 429, July 2012; U of Houston Law Center No. 2012-A-14. Available at SSRN:

Bret Wells (Contact Author)

University of Houston Law Center ( email )

4604 Calhoun Road
Houston, TX 77204-6060
United States

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