Jan. 30, 2018 — The tax bill recently approved by Congress and signed by President Donald Trump includes a provision recommended by University of Houston Law Center Professor Bret Wells in his testimony before a Senate committee to reform international business tax laws.
His testimony on Oct. 3 before the Senate Finance Committee apparently had a major impact in drafting the bill because the new law adopted measures that restrict the ability to strip profits out of the U.S. tax base and represented an aspect of the new law that had not been anticipated by many in the tax community. The session was the last public hearing before release of the tax bill.
Wells, George Butler Research Professor of Law, has written extensively on the problem of inbound earning stripping techniques that advantage foreign-based ownership of multinational corporations. He has written on several occasions that this systemic advantage has provided a significant financial incentive for U.S. multinational corporations to engage in corporate inversions. He has consistently argued that current law favors corporate structures that can maximize inbound base erosion strategies and has argued that there was an urgent need to level the playing field.
Wells testified on these topics in 2011 to the U.S. House Committee on Ways and Means Subcommittee on "Select Revenue Measures on Tax Reform and Investment in the United States." He then testified on this inbound earning stripping problem in 2016 before the Senate Finance Committee hearing on "Integrating the Corporate and Individual Tax Systems: The Dividends Paid Deduction Considered." As a result of that 2016 Senate testimony and further discussions with the Senate staff, Wells was asked to testify again at the October hearing on business tax reform.