Corporate Inversions and Whack-a-Mole Tax Policy

6 Pages Posted: 29 Jun 2014 Last revised: 26 Jul 2014

Bret Wells

University of Houston Law Center

Date Written: June 23, 2014


This article argues that policymakers must address the fundamental tax disparity that creates corporate inverses or else changing forms of inversion transactions will continue to pop-up like moles in a whack-a-mole game. Instead of attacking the inversion symptoms, the United States must comprehensively address the base erosion advantages provided to inbound foreign-based MNEs and protect its source country right to tax profits that originate from within its borders since the base erosion and profit-shifting advantages afforded to inbound foreign-owned MNEs is what fuels these inversion transactions. Thus, the article argues that policymakers need to adopt reform measures that seek to eliminate the significant tax advantages given to foreign ownership of U.S. business activities in order to equalize the playing field between U.S.-based MNEs and foreign-based MNEs. This is the fundamental lesson we are overdue to learn from the corporate inversion phenomenon.

Keywords: Section 7874, corporate inversions, international tax reform, base erosion

Suggested Citation

Wells, Bret, Corporate Inversions and Whack-a-Mole Tax Policy (June 23, 2014). 143 Tax Notes 1429 (2014); U of Houston Law Center No. 2014-A-66. 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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