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House Democrats to Introduce Bill Taking Aim at Inversions

Senate Finance Committee Holds Hearing On Corporate Tax InversionsSenate Finance Committee Holds Hearing On Corporate Tax Inversions
Robert Stack, deputy assistant secretary for international tax affairs at the U.S. Treasury Department speaks during a Senate Finance Committee hearing in Washington, D.C. on Tuesday, Dec. 1, 2015. Photograph by Bloomberg via Getty Images

Two ranking House Democrats will introduce a bill Tuesday seeking to limit corporate inversions.

Representatives Sander “Sandy” Levin of Michigan and Chris Van Hollen of Maryland plan to introduce a bill that seeks to limit the tax deductions that corporations enjoy when they move their headquarters abroad through a merger, according to The New York Times.

The bill specifically targets the practice of “earnings stripping,” in which the new, foreign parent of a U.S. company after an inversion gives the American subsidiary a large loan. The interest on that loan is tax-deductible. Under the new bill, Congress would place limits on the amount of interest a company can deduct from its taxes. Earnings stripping is just one method of many that companies use to reduce their tax burden after inverting—a practice that Fortune has previously called “positively un-American.”

The practice of corporate inversions gained public attention after pharmaceutical giant Pfizer announced it would merge with the Irish pharmaceutical company Allergan in the largest inversion ever this November. The Treasury Department released new rules attempting to limit inversions that same month. And on the campaign trail, curbing inversions has become a bipartsan issue where even Hillary Clinton and Donald Trump have found common ground.