By Kevin Drawbaugh

WASHINGTON (Reuters) – As more U.S. corporations do deals to cut taxes by shifting their tax domiciles overseas, the Senate Finance Committee will hold a hearing on Tuesday focused on these transactions known as inversions.

Nine such deals have been agreed to this year by companies ranging from banana distributor Chiquita Brands International, Inc to drugmaker AbbVie Inc and more are being considered. The transactions are setting a record pace since the first inversion was done 32 years ago.

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Witnesses at the Senate Finance Committee’s hearing will include government officials and academics. Chairman Ron Wyden, a Democrat from Oregon, is expected to call for stand-alone legislation to respond to the flurry of inversions that has Washington on edge.

Democrats, searching for campaign issues before November’s congressional elections, have jumped on inversions, and several of them have offered bills that would curb the deals.

But no new law is likely to result as long as Republicans contend that inversion rules need to be part of a broader overhaul of the tax code, policy analysts said.

The Republican-controlled U.S. House of Representatives will not act on inversions “unless there’s comprehensive tax reform, and that’s dead for this year,” said Greg Valliere, chief political strategist at Potomac Research Group in a client note on Monday.

Inversions are still rare, but they are becoming more common. Of the roughly 60 deals done since 1982, more than half have come in just the last six years, a Reuters review showed.

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An inversion involves a U.S. corporation buying or setting up a smaller company abroad, then shifting its tax home base to that company’s country, which typically has lower tax rates than in the United States.

Such deals seldom mean a U.S. corporation physically leaves home. Usually an inversion means that a company will open a small office abroad, perhaps in England or Ireland, as a new address for tax purposes, leaving major operations intact.

But the move can put foreign earnings out of the reach of the Internal Revenue Service and make other tax savings possible that can boost a multinational company’s bottom line.

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U.S. Treasury Secretary Jacob Lew urged Congress last week to take steps quickly to discourage inversions.

In a letter to members of Congress, he said corporations that do inversions want to keep U.S. advantages – such as intellectual property protection, research support, financial security and reliable infrastructure – without paying for them.

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President Barack Obama’s 2015 budget proposed making inversions harder to do by raising the foreign ownership required. Congressional Democrats have made similar proposals.

Drugstore chain Walgreen Co is weighing a possible inversion. Drugmaker Pfizer Inc’s bid in April to buy UK rival AstraZeneca Plc was structured as an inversion. That deal collapsed, but it drew attention to the issue.

(Editing by Jan Paschal)

[Image: “Greedy Hand Grabs Money,” via Shutterstock]