Democrats in the House and Senate introduced legislation Tuesday to tighten the restrictions on corporate tax inversions, limiting the ability of U.S.-based companies to avoid U.S. taxes by combining with a smaller foreign business and moving their tax domicile overseas.

There have been more than 40 corporate inversions in the last decade, costing the U.S. tax base billions of dollars, according to the bill's proponents. The Treasury Department estimates that the President’s FY 2015 budget proposal on inversions would raise $17 billion in revenue over the next decade.

Under current law, a corporate inversion is not respected for U.S. tax purposes if 80 percent or more of the new combined corporation incorporated offshore is owned by historic shareholders of the U.S. corporation. The proposed legislation would make it harder for U.S. companies to invert by reducing this threshold from 80 percent or more to more than 50 percent. This would effectively require U.S. companies to merge with foreign companies that are roughly equal or larger in size in order to move their location for tax purposes outside the United States and, thereby, escape U.S. tax. The legislation would apply to inversions completed after May 8, 2014.

Co-sponsors of the House legislation, known as the “Stop Corporate Inversions Act of 2014” (H.R. 4679),  include Ways and Means Committee ranking member Sander Levin, D-Mich., Rep. Charles Rangel, D-N.Y., Jim McDermott, D-Wash., Richard Neal, D-Mass., Lloyd Doggett, D-Texas, John Larson, D-Conn., Danny K. Davis, D-Ill.,, Budget Committee ranking member Chris Van Hollen, D-Md., Rosa DeLauro, D-Conn., and Jan Schakowsky, D-Ill..

“Corporate inversions are a growing problem, costing the U.S. tax base billions of dollars and undermining vital domestic investments,” said ranking member Levin in a statement. “This egregious practice requires immediate action. This legislation would stop American companies from avoiding U.S. taxes simply by purchasing a smaller foreign company.”

The companion Senate legislation was introduced Tuesday by Levin’s brother, Sen. Carl Levin, D-Mich., who chairs the Senate Permanent Subcommittee on Investigations

It largely mirrors the inversion proposal included in President Obama’s fiscal year 2015 budget.

“To those corporations who renounce their American citizenship to dodge their fair share of our national security costs, this legislation says ‘stop: no get-out-of-taxes-free card,’” said Rep. Doggett.  “By exploiting other tax loopholes, Pfizer already pays little in federal taxes, but its proposed inversion to pay even less goes much too far.  Congress should act now to prevent multinationals from demanding the benefits of being American without paying for them.”

On the Senate side, 14 Democrats are co-sponsors, including Carl Levin, D-Mich., Sheldon Whitehouse, D-R.I.,  Dianne Feinstein, D-Calif., Tim Kaine, D-Va., Brian Schatz, D-Hawaii, Mazie Hirono, D-Hawaii, Ben Cardin, D-Md., Jay Rockefeller, D-W.Va.; Barbara Boxer, D-Calif.; Bill Nelson, D-Fla.; Tim Johnson, D-S.D; Angus King, I-Maine; Debbie Stabenow, D-Mich.; and Elizabeth Warren, D-Mass.

The bill would effectively impose a two-year moratorium on inversions, the practice of shifting a corporation’s tax residence overseas through acquisition of an offshore company to avoid paying U.S. income taxes. The two-year moratorium would be achieved through a two-year sunset provision designed to provide time for Congress to work on bipartisan comprehensive corporate tax reform.

“These transactions are about tax avoidance, plain and simple,” said Carl Levin in a statement. “The Treasury is bleeding red ink, and we can’t wait for comprehensive tax reform to stop the bleeding. Our legislation would clamp down on this loophole to prevent corporations from shifting their tax burden onto their competitors and average Americans while Congress is considering comprehensive tax reform.”

A corporate lobbying group, the Alliance for Competitive Taxation, said it opposed the legislation and released a statement of its own. "The fact that we've seen a growing number of American companies in recent months announce plans to merge with foreign companies and reincorporate abroad only highlights the many deficiencies of the U.S. tax code," aid ACT. "The U.S. has the highest corporate tax rate in the developed world and still uses an outdated system of international taxation, making it harder for American businesses to compete in the global marketplace. If we want to encourage companies to locate, invest, and create jobs in the U.S., then we have to address the root cause – America's broken tax code. We have serious concerns that the legislation proposed by Senator Levin and Congressman Levin would do nothing to address the competitive disadvantages inherent in our tax code. It would actually make the situation worse and could lead to even more jobs and businesses leaving America. We continue to believe that leaders in Washington should focus on enacting comprehensive tax reform that establishes a modern, globally-competitive tax system and aligns the United States with the rest of the world."

Another group lobbying for lower corporate tax rates, the Rate Coalition, also commented on the proposed legislation. “Senator Levin’s proposal to stop corporate inversions only deals with a symptom, but not the larger disease,” said Rate Coalition co-chairs Elaine Kamarck, former White House adviser to President Bill Clinton and Vice President Al Gore, and James P. Pinkerton, former White House domestic policy adviser to Presidents Ronald Reagan and George H.W. Bush. “The disease is that America has the highest corporate tax rate in the developed world and an overly complicated code. The reality that some companies are fleeing the United States for countries with more competitive corporate tax rates and simpler codes is symptomatic of the fact that the only real solution is tax reform. America’s tax code has not been reformed in almost thirty years, while our competitors in the international marketplace such as Japan, the United Kingdom and Canada, among others, have lowered rates and undertaken significant reforms aimed at creating jobs and attracting foreign companies. As our international competitors continue to cut their corporate tax rates, the pace of companies leaving the United States will only increase, unless our leaders put aside partisan politics and come together to lower our 35 percent corporate rate to an internationally competitive level, simplify the code and design a system that will help U.S. businesses grow and hire. Democrats and Republicans in both houses of Congress and on both ends of Pennsylvania Avenue have voiced their support for tax reform. Instead of targeting specific tax practices, our leaders should consider this an opportunity to finally pass real tax reform that encourages economic expansion and incentivizes companies to start and grow here in the United States.”