Obama plan to stop tax inversions stirs U.S. business concerns

The Obama administration's plan to prevent American companies from shifting their headquarters overseas to avoid U.S. taxes is coming under fire from companies and banks that say it would be costly and cumbersome.

At issue are proposed Treasury regulations to combat "earnings stripping," a key goal for companies that carry out tax-avoiding mergers known as "inversions" to reincorporate abroad, if only on paper, to cut their taxes.

The practice effectively shifts taxable earnings from U.S. operations to the redomiciled former American parent as debt interest payments that are tax deductible in the United States and subject to a lower income tax rate overseas.

The Treasury Department is scheduled to hold a public hearing on the proposed changes on Thursday.

The administration's proposals, which could be finalized within months, have already dampened interest in global mergers.