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The Battle Over U.S. Corporate Tax Inversion

American companies bailing out on America. They call it inversion. Is it desertion?

This June 4, 2014 photo shows a Walgreens retail store in Boston. Walgreen Co. _ which bills itself as “America’s premier pharmacy” _ is among many companies considering combining operations with foreign businesses to trim their tax bills. (AP)

This June 4, 2014 photo shows a Walgreens retail store in Boston. Walgreen Co. _ which bills itself as “America’s premier pharmacy” _ is among many companies considering combining operations with foreign businesses to trim their tax bills. (AP)

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

Guests

Sen. Carl Levin (D-MI), senior U.S. Senator from Michigan. (@sencarllevin)

Andrew Ross Sorkin, financial columnist for the New York Times‘ DealBook and co-anchor of CNBC’s “Squawk Box.” Author of “Too Big To Fail.” (@andrewrsorkin)

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.”

Bloomberg’s list of companies using inversions

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Dick West (Dr. Walter Richard West, Wah-pah-nah-yah or Wapah Nahya, Light Foot Runner), 1912−1996, Southern Cheyenne, Oklahoma. Cheyenne Sun Dance—The Third Day, 1949. Paper, casein, 24 5/8 x 35 1/8 inches. © 2013 Philbrook Museum of Art, Inc., Museum purchase, 1949.20, Photo: John Lamberton.

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