The Levin brothers, Rep Sander Levin and Sen Carl Levin are out to get Burger King. The issue at hand is tax inversions, like the fast food chain’s purchase of Canadian Donut Franchise Tim Hortons and its announced plans to move it’s HQ, if not much of it’s staff, to Canada to benefit from a lower tax rate. In other words, the so-called tax inversions that the Levin brothers fear will cause a wave of US companies to move their headquarters offshore and reduce the US tax base. While Sander’s boss Harry Reid has not been overly enthusiastic about introducing anti-inversion legislation for now, the way forward for these two economic policy wizards seems to be promoting a change in Treasury Department policy that would make it less profitable for US companies to utilize tax inversions. How to do it would be through some sort of policy directive that would reduce the tax benefits of moving to a lower tax jurisdiction. That would have to mean penalties of some sort, whether directly applied or perhaps involving the elimination of any benefits or subsidies that the tax-inverting corporation was deemed to be receiving.

So, the question is, what can the Treasury Department actually do that doesn’t require Congressional approval? The Treasury Department has been around a long time. Along with State and Defense, (The Department of War until the late 40’s), it was one of the first three executive departments of the nation, having been founded in 1789. But Congress has always had the power to pass the laws which the Treasury Department then enforces, and without Congressional approval, Treasury is limited to some sort of administrative action. Whether opposing or attempting to prohibit corporations seeking tax efficiency is good economic policy in today’s world is doubtful. But even assuming it is a worthwhile fight, Treasury seems to be limited in their scope of retaliatory measures. And let’s be clear, this is retaliation to discourage a feared flood of tax inversions eroding the tax base. This seems rather to be a case of moral suasion, or spin to put it more bluntly, pursued by the administration rather than a clear change in policy. There of course could be a way to solve this problem: lower the corporate tax rate from the near-European level of 35%. That would certainly be a clear change of policy rather than Secretary Lew giving press conferences to supplement the President’s sound bites about over-taxed corporations being “deserters.” And the Levin brothers would have even less of a chance to pursue their ill-guided legislation.