The Treasury secretary had called for economic patriotism in a letter to congressional leaders of tax committees earlier in the week pushing for action against so-called "tax inversions," in which corporations merge with companies based in countries with lower corporate taxes, and then base the parent company in that jurisdiction to avoid U.S. taxes. Lew urged Congress to pass Democratic legislation that would effectively place a moratorium on such maneuvers
Hatch, who represents Utah and is the ranking Republican on the Senate Finance Committee, responded Thursday with criticism of those measures and of Lew's rhetoric, while leaving the door open to action.
In a letter to Lew, Hatch rejected "punitive, retroactive policies designed to force companies to remain domiciled in the United States." He also wrote that he hoped that "economic patriotism" extended to addressing the projected unsustainability of the federal debt.
Hatch also allowed that there "may be steps Congress can take" short of comprehensive tax reform, although he did not specify what those might be.
Sen. Ron Wyden, D-Ore., the chairman of Hatch's committee, said Wednesday that the “inversion loophole must be plugged" and noted that he would explore options for preventing further inversions both in the long term and in the short term. The committee is scheduled to hold a hearing on international taxation Tuesday.
Both sides agree on the need for broad corporate tax reform that lowers tax rates, reducing the incentive for companies to move their headquarters abroad. The Obama administration and Democrats, however, have pushed for immediate implementation of a rule that would require that a company attempting to "invert" transfer a majority of its stock to the offshore company it is trying to merge with. That measure would be intended to ensure that if a company remained majority U.S.-owned, it would continue to pay U.S. business taxes.
A number of major U.S. companies in recent months have explored mergers that would significantly decrease their tax liabilities, including medical device maker Medtronic, banana company Chiquita and pharmacy chain Walgreens. The Democratic legislation would apply retroactively to companies completing mergers after May.
"Economic patriotism" is a term Obama also used on the campaign trail for his re-election campaign in 2012. He used it in connection with his stated focus on middle-class fortunes, but also to portray opponent Mitt Romney as indifferent to Americans' concerns. The Obama campaign also frequently criticized Romney's overseas investments.