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Aside from the ethical concerns around corporate inversions, the clearest case for establishing legislation to prevent this practice is the $2.4 trillion that U.S. multinationals have stashed offshore, and the potential for inversions to help these companies avoid up to $695 billion in U.S. tax on these profits.

But those of us who find the copious corporate tax loopholes that enable corporate inversions problematic also worry that these tax-motivated moves could result in a bigger, longer-term fiscal drain. Newly inverted companies could more easily engage in “earnings stripping,” which occurs when companies use accounting tricks to shift their profits from the United States to foreign tax havens. A new financial release from Medtronic, which successfully inverted in early 2015 and now claims it is headquartered in Ireland, suggests that the health care giant may be engaging in these accounting tricks.

Like many multinationals, Medtronic sells products and services around the world, and the company’s financial reports disclose the location of both the company’s sales and profits. Over the past decade, U.S. sales consistently have accounted for about 58 percent of Medtronic’s worldwide revenue. But since the company inverted last year, the U.S. share of pretax income has fallen precipitously: the company’s last pre-inversion disclosure showed the U.S. representing 54 percent of sales and 46 percent of income, but the company’s newest annual report, covering 2015, shows that while the company derives 58 percent of its revenues from U.S. sales, those revenues only translated into 8 percent of the company’s worldwide income

Earnings stripping is the likely culprit. This scheme typically takes the form of intra-company borrowing: a U.S. subsidiary borrows cash from its foreign parent, and pays interest on the loan to the parent. The interest payments reduce the company’s U.S. taxable income, and the interest income boosts the company’s foreign income — even though the entire transaction amounts to nothing but shifting profits from one corporate pocket to another.

Earlier this year, the U.S. Treasury issued regulations that are designed to reduce the tax benefits of earnings stripping, by treating interest payments of this as non-deductible dividends, rather than as taxable-deductible interest. If the dramatic shifts in the location of Medtronic’s income over the past two years are due to earnings stripping, one can only hope that the new rules will crack down on such tax avoidance schemes in the future.