NICOLE GAUDIANO

WASHINGTON – Sen. Bernie Sanders is targeting “corporate deserters” with legislation to ban businesses from receiving lucrative government contracts when they try to dodge U.S. taxes by moving overseas.

The Vermont independent announced the legislation Friday after pharmaceutical giant AbbVie became the latest example of a U.S. company seeking to shift its tax residence abroad through a merger with a foreign partner, in this case Shire Pharmaceuticals, its European rival.

Sanders said he will file an amendment to a Defense Department authorization bill to prohibit the government from awarding federal contracts to companies that reincorporate overseas to avoid paying U.S. income taxes.

“I have a message for these corporate deserters: You can’t be an American company only when you want corporate welfare from American taxpayers or you want lucrative contracts from the federal government,” Sanders said in a statement. “If you want the advantages of being an American company, then you can’t run away from America to avoid paying taxes.”

A tax code loophole known as “corporate inversion” allows U.S. companies reduce their tax burden here by merging with a foreign company in a low-tax country and reincorporating overseas. Recent data from the Congressional Research Service shows 47 companies, many in the pharmaceuticals business, have done inversions in the past decade.

Forbes calls the AbbVie-Shire deal the largest inversion deal ever. If the deal closes, Chicago-based AbbVie’s tax residence, though not its management, would move to Britain. The company’s effective tax rate would drop to 13 percent by 2016 from 22 percent for 2013, according to regulatory filings.

Sanders notes that such deals are allowed even when most of a company’s profits and sales occur in the United States. Nearly a quarter of $72 billion in sales last year at drugstore giant Walgreens — which is considering moving its headquarters from to Switzerland for tax savings — came from Medicare and Medicaid, Sanders said, citing a report from Americans for Tax Fairness.

Treasury Secretary Jack Lew wrote Congress this week calling for immediate action to close the tax loophole.

Meanwhile, Rep. Sander Levin of Michigan, top-ranking Democrat on the House Ways and Means Committee, introduced legislation in May to limit inversions. The committee estimates it would save $19.5 billion over 10 years. The proposal, and a companion Senate bill by Sen. Carl Levin, D-Mich., largely mirror an inversion proposal in President Barack Obama’s fiscal 2015 budget.

“These corporate inversions are costing the U.S. billions of dollars and undermining vital domestic interests,” Rep. Levin said in a statement. “We can and should address this problem immediately through legislation to tighten rules to limit the ability of corporations to simply change their address and ship U.S. tax dollars overseas.”

Contributing: Kim Hjelmgaard, USA TODAY, and the Associated Press.

Contact Nicole Gaudiano at ngaudiano@gannett.com. Follow her on Twitter at www.twitter.com/ngaudiano.