The wheels of the federal government can grind very, very slowly, as Sen. Charles Grassley found out this week.
Grassley, an Iowa Republican, has been pestering the Treasury Department to finish a report that Congress asked for in 2004. The study is supposed to examine the effectiveness of congressional limits on transactions known as inversions, in which U.S.-based companies lower their tax rates by moving their legal addresses to a foreign jurisdiction.
Congress called for the study in 2004 when it changed the law in response to a first wave of inversions in 2001 and 2002. Lawmakers set a Dec. 31, 2006 deadline for the report.
Now, more than eight years after the due date, with another wave of inversions under way by companies such as Medtronic Inc. and AbbVie Inc., Treasury told Grassley in a July 14 letter that it has “begun work” on the study.
Alistair Fitzpayne, assistant secretary for legislative affairs, wrote that the department wanted to wait until it had issued “comprehensive regulatory guidance” on the issues involved.
“These transactions,” he wrote, “raise significant policy concerns because they facilitate significant and irreversible erosion of the U.S. tax base.”
Further rules, Fitzpayne noted, won’t stop the current inversions, and he added that the administration is ready to work with Congress on changes to the law.
That may take a while.