Corporate tax dodgers leave the rest of us to foot the bill
Allan Sloan had a huge column about inversion in the Washington Post business section Sunday. It was a copy of his column in Fortune. Not being an accountant, I usually can't comprehend what Allan Sloan is saying. This time he came through loud and clear.
Allan Sloan is hardly a flaming leftist, so if inversion has him hopping mad, he should be taken seriously. It's hard to limit the quoted material to just four paragraphs.
I see that unhappycamper already has a column about Walgreens. If the moderators want, I can make this a post in that thread. Allan Sloan is talking about inversion in general, though, not just Walgreens.
I'm linking to both the Fortune article and the Washington Post article, which will have comments.
Disclaimer: I own shares of Covidien, which is in the middle of an inversion scheme right now.
Positively un-American tax dodges
Corporate tax dodgers leave the rest of us to foot the bill
By Allan Sloan July 12
Ah, July! What a great month for those of us who celebrate American exceptionalism. There’s the lead-up to the Fourth, countrywide Independence Day celebrations including my town’s local Revolutionary War reenactment and fireworks, the enjoyable days of high summer, and, for the fortunate, the prospect of some time at the beach. ... Sorry, but this year, July isn’t going to work for me. That’s because of a new kind of American corporate exceptionalism: companies that have deserted our country to avoid paying taxes but expect to keep receiving the full benefits that being American confers, and for which everyone else is paying.
Yes, leaving the country — a process that tax-techies call inversion — is perfectly legal. A company does this by reincorporating in a place such as Ireland, where the corporate tax rate is 12.5 percent, compared with 35 percent in the United States.?Inversion also makes it easier to divert what would normally be U.S. earnings to foreign, lower-tax locales. But being legal isn’t the same as being right. If a few companies invert, it’s irritating but no big deal for our society. But mass inversion is a whole other thing, and that’s where we’re heading.
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Then there’s the “Can you believe this?” factor. Carnival, a Panama-based company with headquarters in Miami, was happy to have the U.S. Coast Guard, for which it doesn’t pay its fair share, help rescue its burning Carnival Triumph. (It later reimbursed Uncle Sam.) Alexander Cutler, chief executive of Eaton, a Cleveland company that he inverted to Ireland, told the City Club of Cleveland, without a trace of irony, that to fix our nation’s budget problems, we need to close “those loopholes in the tax system.” Inversions, I guess, aren’t loopholes.
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How much money are we talking about inverters sucking out of the U.S. Treasury? There’s no number available for the tax revenue losses caused by inverters and never-heres so far. But it’s clearly in the billions. Congress’s Joint Committee on Taxation projects that failing to limit inversions will cost the Treasury an additional $19.5 billion over 10 years — a number that seems way low, given the looming stampede. But even $19.5 billion — $2 billion a year — is a lot, if you look at it the right way. It’s enough to cover what Uncle Sam spends on programs to help homeless veterans and to conduct research to create better prosthetic arms and legs for our wounded warriors.
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