By: Tiffany Ray, InternPosted on August 11, 2014 Issues: Tax & Budget

Taxpayers scored a major win this week when Walgreen Co. nixed plans to become the latest U.S. corporation to move its corporate address abroad in order to dodge tax bills here at home. Public outcry against the legal loophole known as “inversion” is reaching a fever pitch; clearly, Walgreen was listening. Let’s hope Congress is, too.

Inversion is a scheme by which a company based in the U.S. can merge with a company abroad and then re-incorporate in that other country – one with a more advantageous tax structure, typically the UK, Ireland, or Switzerland – to avoid paying taxes at home.

These U.S. inverters are, literally and figuratively, un-American. With each new deal that’s struck, they push even more of the tax burden onto workers, families, and small business [PDF].

The worst part is, inversion is legal. At least for now. As long as at least 20 percent of the shareholders in the foreign corporation remain shareholders in the combined corporation, the U.S. –based company can effectively change its address for tax purposes, even while its leadership and operations remain in the U.S.

Walgreen faced a torrent of criticism after it announced plans to invert as part of its purchase of Switzerland-based Alliance Boots. Advocates with Americans for Tax Fairness and other groups collected more than 300,000 signatures and organized rallies opposing the move.

The Obama Administration, too, is speaking out against inversions, calling for “economic patriotism” and legislative action. In the meantime, Treasury Secretary Jacob Lew told The New York Times last week the Administration is considering a “very long list” of its own options.

Billionaire investor Mark Cuban, owner of the Dallas Mavericks, gave the movement an assist in July, announcing on Twitter that he would dump shares of any company that abandoned the U.S. to avoid paying taxes and encouraging other investors to do the same.

“If I own stock in your company and you move offshore for tax reasons I’m selling your stock,” Cuban tweeted to his legions of fans and followers. “There are enough investment choices here.”

As Cuban correctly noted in his tweets, there are things we can do to stop companies from shirking their responsibilities here at home. Rep. Rosa DeLauro, D-Conn., along with Reps. Sandy Levin, D-Mich., and Lloyd Doggett, D-Texas, has introduced the No Federal Contracts for Corporate Deserters Act (H.R. 5278), which would provide an important disincentive by rendering companies that invert ineligible for federal contracts or subcontracts.

“For too long we have let companies avoid their tax obligations at the expense of companies who pay their fair share,” DeLauro said in a news release. “Even worse, the federal government has been subsidizing this bad behavior, by continuing to reward inverted companies with lucrative federal contracts. These companies take advantage of our education system, our research and development incentives, our skilled workforce, and our infrastructure, all supported by U.S. taxpayers, to build their businesses. But when the tax bill comes due, they hide overseas. Yet suddenly, when federal contracts are being applied for, they are all as American as Uncle Sam once again. This has to stop.”

Sens. Carl Levin, D-Mich., Dick Durbin, D-Ill., and Jack Reed, D-R.I., have introduced a related bill (S. 2704) in the Senate.

Momentum is building against this irresponsible corporate behavior. A bar from federal contracts is only one in a menu of options for reducing or eliminating inversions. Other legislators have proposed changes in the requirements for reincorporating overseas, making inversions harder to do.

The longer we wait to close the loophole, the worse it will get for the rest of us. Already, 47 U.S. corporations have inverted over the last 10 years. And more deals remain in the works. Preventing corporate inversions now could save as much as $19.5 billion over the next 10 years in corporate taxes that would otherwise go unpaid, according to estimates from Congress’ Joint Committee on Taxation [PDF].

Congress should act quickly to prevent corporations from lining their pockets with unpaid taxes. It’s the smart thing to do, and the right thing.