Are Corporate Inversions Un-American?
Today, the Obama administration steps up its efforts to reverse the growing trend of US companies reincorporating overseas for tax purposes. As reported recently in the WSJ, "the current wave of inversions is being driven in large measure by business unhappiness with the US tax system, which many firms view as out of date and uncompetitive. At 35%, the US corporate tax rate is the developed world's highest. The US is also one of the few developed nations that still seek to tax their firms on their global earnings; most countries tax only domestic profits. The most common method of inverting currently involves a US firm merging with a foreign company - typically a smaller one - and reincorporating in a country with business-friendlier tax rules, such as the UK or Ireland."
The Reuters article linked below suggests that a temporary Band-Aid might be a "simple rule change that would deem any company with half of its business in the US to be US-domiciled, thus, subject to US taxes. This type of rule change could be retroactive to May of this year and be implemented independently of moves to achieve broader tax reform."
While the issue of patriotism can certainly distract us, it is the issue of supporting American businesses as they compete in the global marketplace that is the overriding issue here. Corporate inversion is just one example suggestive of a US tax system that is badly in need of reform - now may be the time to get to work.
www.reuters.com/article/2014/07/24/us-usa-tax-obama-inversions-idUSKBN0F...
