Treasury’s Lew urges immediate action from Congress to stop inversions by Geoffrey Smith @FortuneMagazine July 16, 2014, 5:31 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons The Obama administration has taken fright at the wave of U.S. companies shifting their corporate base overseas in search of lower taxes, and has urged Congress to take action immediately to stop the “hollowing out” of the U.S.’s corporate income tax base. “Congress should enact legislation immediately – and make it retroactive to May 2014 – to shut down this abuse of our tax system,” Treasury Secretary Jacob Lew said in a letter to lawmakers obtained and published by the Wall Street Journal late Tuesday. “We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes,” he added. Business leaders make no apologies for the tactic, which is costing billions of dollars a year in lost taxes. JPMorgan Chase Inc. chief executive Jamie Dimon told a conference call Tuesday: ““You want the choice to be able to go to Wal-Mart to get the lowest prices. Companies should be able to make that choice as well.” Lew’s letter comes in a week that has already featured two such “inversion” driven deals, with Chicago-based pharmaceuticals company AbbVie Inc. ABBV starting talks with U.K.-based (but Dublin-registered) Shire Plc SHPG , and generic drug-maker Mylan Inc. MYL buying non-U.S. assets from Abbot Laboratories ABT and re-registering the combined entity in the Netherlands. President Barack Obama’s budget for this year had included a suggestion that companies not be allowed to move their tax domicile without change in control of the company itself. That hasn’t yet been enacted, but senior Congressmen have warned that transactions that take place after May 2014 won’t lower corporations’ U.S. tax liabilities. According to the Paris-based Organisation for Economic Cooperation and Development, the U.S.’s average rate of corporate income tax was one of the highest in the developed world as of 2013, at 39.1%, while the statutory rate was 35%. At the other end of the scale, the rate is only 12.5% in Ireland, 23% in the U.K. and 25% in the Netherlands. Almost all countries, however, offer various allowances and exemptions that allow the effective tax rate paid by companies to be significantly lower. The Government Accountability Office concluded in a report last year that effective tax rates for U.S. companies were often as low as 23%. The U.S. isn’t alone in cracking down on aggressive tax practises by companies. With populations across Europe also suffering from years of budget austerity, the European Union is investigating the tax practises of various countries to see whether “sweetheart deals” offered to companies such as Starbucks Corp SBUX , and Amazon.com Inc. AMZN constitute illegal state aid.