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Democratic lawmakers wanted to use a year-end spending bill to punish U.S. companies that moved their tax addresses overseas by barring them from getting government contracts. It didnt work.

In the end, all the Democrats got was new language that may not affect any companies and a renewed provision that has proved ineffective in the past.

Its fairly watered down, Representative Ander Crenshaw, a Florida Republican, said of the corporate tax inversion language that applies across the U.S. government. Democrats wanted to strengthen that, and I think most people are happy that that didnt happen.

The policy is a victory for companies including Medtronic Inc. (MDT) and Tyco International Plc (TYC), which have millions of dollars in U.S. contracts and will be able to keep their business with the government. Medtronic is moving its tax address to Ireland next year and Tyco completed an inversion in 1997.

The language in the 1,603-page spending plan to fund the government represents the latest setback to Democrats efforts to prevent companies from inverting or punish them if they do. Inversion plans by companies such as Burger King Worldwide Inc. and Pfizer Inc. (PFE) have brought national attention to the issue.

Democrats including Senator Richard Durbin of Illinois have been trying to use tax law or contracting rules to curb the practice.

The spending bill, which will avert a government shutdown after funding expires this week, includes two limits on federal contracts to inverted companies.

The first continues an existing rule. Lawmakers prohibited some companies that had completed inversions from receiving contracts from the Department of Homeland Security starting in 2002, and temporarily expanded the ban across the federal government in 2007.

Similar one-year bans were enacted in four of the following six years.

That hasnt stopped some of the companies from winning U.S. government contracts by exploiting gaps in the rules.

Read more from the original source:
Inversion Curb Democrats Sought Watered Down in New Bill