S3847

On February 11, 2026, Sen. Durbin (D-IL) introduced the Stop Corporate Inversions Act of 2026 (S3847) in the 119th Congress. The bill is in early stage — referred to the Senate Committee on Finance with 9 Democratic cosponsors. Critically, it has a companion bill (HR7493) in the House referred to Ways and Means, increasing passage probability. The bill would amend Section 7874 of the Internal Revenue Code to treat foreign corporations that inverted after May 8, 2014, as domestic corporations for U.S. tax purposes. This retroactive provision targets three named healthcare and industrial companies: Medtronic (MDT), Perrigo (PRGO), and Allegion (ALLE). The money trail here is a tax increase, not a spending authorization. There is zero funding appropriated. The mechanism is a penalty: companies lose their lower foreign effective tax rates and must pay U.S. corporate tax (21%) on worldwide income. The sponsor estimates annual tax increases of $40M to $1.2B per company. Actual impact depends on each company's non-U.S. income share and effective tax rate; MDT at ~15% faces a ~6 percentage point increase, while PRGO at sub-10% faces a larger jump. These are direct, recurring hits to net income, not one-time charges. Structural winners: U.S.-domiciled competitors in the same sectors that never inverted. In medical devices, that includes J&J (JNJ), Boston Scientific (BSX), and Abbott (ABT) — none face this tax risk. In security hardware, ASSA ABLOY (Sweden-domiciled but not U.S.-inverted) and dormakaba are unaffected. Structural losers: MDT, PRGO, and ALLE exclusively — the bill names them directly and applies retroactively to any acquisition after May 8, 2014. No other publicly traded U.S. healthcare or industrial companies meet the inversion criteria in this date window based on the bill's text. Real market data confirms the market is already pricing in this risk. MDT at $79.36 on April 30 is 0.6% above its 52-week low of $78.91, with a 7-day decline of 4.75% and a 30-day decline of 8.41%. The daily closes in the last two weeks show a steady erosion from $83.79 on April 23 to $79.36 — a loss of $4.43 or 5.3% in seven trading days. ALLE similarly collapsed from $148.40 on April 24 to $136.77 on April 30 — a 7.8% drop in four trading days, accelerating exactly when the bill's companion in the House could be gaining attention. PRGO has been more range-bound but remains 60% below its 52-week high, pricing in existential risk given its small market cap. Timeline: The bill requires passage through Senate Finance (controlled by Democrats), full Senate, House Ways and Means, full House, and presidential signature. Given the 119th Congress's split control (Senate 51-49 Democratic, House 218-214 Republican), this bill is unlikely to pass in its current form before the 2026 midterm elections. However, the companion bill in the House signals that Democrats intend to make this a campaign issue. Realistically, passage probability is 20-30% in this Congress, rising to 40-50% if Democrats win unified control in November 2026 and the bill is reintroduced in the 120th Congress (2027-2029). Investors in these three names face the risk over a 12-24 month horizon.