American companies bailing out on America. They call it inversion. Is it desertion?
It’s a neat trick for big American companies to avoid a heap of American taxes: stop being American. American corporations are bailing out of American “citizenship.” One day they are proudly based in the USA. The next, they’re not. They’re suddenly Irish or Dutch or Australian or Israeli. And paying lower taxes on the same operations. It’s technically called “inversion.” Last week President Obama called it desertion. It’s a big deal. This hour On Point: American companies, bailing out on American taxes – and what to do about it.
– Tom Ashbrook
Allan Sloan, senior editor-at-large for Fortune Magazine.
Diane Ring, professor at the Boston College Law School.
From Tom’s Reading List
Fortune: How to stop companies from deserting America before it’s too late – “Barely a day seems to pass without a corporation announcing that it plans to leave the U.S. to save taxes but wants to continue having its business, its employees, its directors, and especially its top executives benefit from our rule of law, democratic system, and the other great things that make America America. It just doesn’t want to pay its fair share for those things.”
Boston Globe: Inverters aren’t deserters – “A company that structures a merger as an inversion is not deserting America, nor is it avoiding US taxes on revenue earned in the United States. Corporations that earn profits in America pay taxes in America, no matter where their legal domicile happens to be.”
The Wall Street Journal: The Lose-Lose Tax Policy Driving Away U.S. Business — “The U.S. corporate statutory tax rate is one of the highest in the world at 35%. In addition, the U.S. has a world-wide tax system under which profits earned abroad face U.S. taxation when brought back to America. The other G-7 countries, however, all have some form of a territorial tax system that imposes little or no tax on repatriated earnings.”