The Obama administration is trying to clamp down on the corporate rush to move abroad for the tax savings -- doing what it says Congress is unwilling to do.
Few argue that the loopholes that encourage such tax-driven mergers with foreign companies are fine and dandy. In fact, many lawmakers and tax experts wouldn't mind seeing them closed.
But inversions are relatively small potatoes compared to other tax breaks companies enjoy.
Before the Treasury came out with new rules on Monday, the Joint Committee on Taxation had estimated that U.S. companies that invert could cost federal coffers about $20 billion in lost revenue over the next decade.
Compare that to the roughly $400 billion it will cost over the same decade if lawmakers choose to re-up the "temporary" corporate tax breaks that expire every few years and are regularly extended, according to the Committee for a Responsible Federal Budget.
Not every corporate tax break is bad. Far from it.
But some are dumb; others are mistargeted or engineered by special interests. And some, like those companies can exploit when inverting, are used in ways lawmakers never intended.
Take the domestic manufacturing deduction. It's one of the most expensive tax breaks available to corporations, costing close to $80 billion over five years. It lets companies deduct a percent of the cost of certain manufacturing expenses.
Related: 7 things you must know about corporate taxes
Come tax time, it's amazing how many companies fancy themselves manufacturers. Movie makers and fast-food hamburger makers can qualify apparently.
Or consider the many strategies available to a U.S.-based multinational when it wants to lower its tax bill, even while it remains headquartered in the United States.
The one that's gotten a lot of attention is profit-shifting. This can happen when a U.S. company shares the cost of its research and development with one of its foreign subsidiaries based in a low-tax country.
In exchange, the subsidiary shares in the profits that result from the products born of that R&D, which is usually conducted on U.S. soil.
What troubles tax experts is when the the low-taxed foreign subsidiary books profits that are far higher relative to its investment than those reported by the U.S. branch.
Then there are very industry-specific tax breaks, the broad economic benefits of which are, um, not at all clear. In fact, Howard Gleckman, editor of the blog TaxVox, calls them "giveaways."
In his book, these include subsidies for energy production, credit unions and corporate-owned life insurance. Also on the list: an accelerated depreciation schedule (7 years) for the cost of building or improving NASCAR racetracks and related facilities. Another is a special break for Puerto Rican rum manufacturers.
Bottom line: Addressing inversions barely scratches the surface of the real work that has to be done to clean up the corporate tax code.
Maybe next year.
