Vance, Whitehouse team up to eliminate tax breaks for corporate consolidation
Source: The Hill
03/21/24 11:30 AM ET
Sen. JD Vance (R-Ohio), a Trump-aligned rising conservative star, and Sen. Sheldon Whitehouse (D-R.I.), a leading liberal advocate of fighting climate change, have formed the Senate’s newest odd couple by joining forces to eliminate tax breaks for corporate consolidation.
Vance and Whitehouse on Thursday unveiled the Stop Subsidizing Mergers Act, which would end the tax-free treatment for corporate mergers and acquisitions involving firms with average annual gross receipts of more than $500 million over a three-year span. They introduced the bill in response to the dramatic increase in large corporate mergers, which have nearly doubled over the past 10 years.
Under current law, if a corporate merger is structured so that the firm making the acquisition does so by exchanging stock, the increase in value of the company being acquired is often considered tax exempt. This allows shareholders to avoid taxes on the appreciation of the acquired company’s value at the time of sale, the bill’s sponsors say.
Under their proposal, shareholders who see the value of their holdings increase in all-stock mergers would pay taxes on the gains they receive from the merger instead of waiting until they sell the new shares to pay taxes. Vance and Whitehouse say that in practice, corporations and shareholders can escape paying any taxes by continually deferring their obligations to the federal government.
Read more: https://thehill.com/homenews/senate/4547158-vance-whitehouse-tax-breaks-corporate-consolidation/
