QUESTION: Did corporate inversion come about because of the repeal of Glass Steagall?

[misterhighwasted]

It was GW Bush that repealed Glass Steagall wasn't it?

Just trying to find a starting point for the corporate tax dodge.

Was it Bush's politics that opened the door, which was eventually followed by completely removing the door altogether, with the SC corporate personhood decision. SC appointees made by Bush Senior.

Perhaps anther reason why Bush Jr was selected then rather than elected?

Thanks & appreciate any input from Duers more knowledgeable on this subject than I am.

[fredamae]

1. Twas Bill Clinton

in 1999 who signed the "mostly" Repeal of Glass-Steagall via the Gramm-Leach-Bliley Act.
As I understand it-GLB didn't outright repeal GS but it certainly caused, imo-terminal illness to it's "immune system" protecting "us" from corruption.

[misterhighwasted]

2. Oye Bill Clinton..^This AND NAFTA?

Thanks. Was it Glass Steagall then that once protected the US from inversion?

Can we then lay the blame for the current inversion on the dismantling of Glass Steagall? Regardless of who did the dismantling.

[fredamae]

6. No question

about it-I know little to nothing about corporate taxes-so I refer your question to others here who likely have more knowledge who might help with specifics...
However, Reagan began deregulating (seems like) everything/anything he could. These things take time, consistency and perseverance to systematically and incrementally meet those goals. Am I wrong to assume one might start looking back that far to find the earliest blueprint?
I imagine your answers will be found connected to several different congresses and POTUS' over several decades.

[on point]

3. Don't think GS affects this. Check corp tax reduction and other changes Bush did

But also possible it was there all along it is just the wall street ears figured a new ploy

We need either an international treaty to beat the race to the bottom in taxes on corps and 1%, or tariffs to protect against lesser standards for environment! labor, safety etc standards AND a tax on sales in the country so there is no incentive to do the inversions

[misterhighwasted]

4. True. Without the incentives, it wouldn't be done.

It shouldn't have taken this long to correct the problem.
A government that functions on behalf of their Nation would have stopped this as soon as the for-profit mass exit became apparent.

Thanks for your response.

[alc]

5. incorporation is now a "service"

To do business (on any scale), you need to incorporate. Suppliers, clients, customers, partners, banks, everyone you deal with wants some of the guarantees/protections that incorporation gives. Inversions mostly grew out of market changes (globalization), communication improvements, and more countries competing to be a companies "headquarters" and provide the service.

Until recently (90's, 2000's) it made most sense for US corporations to incorporate in the US because so much of the business is here - customers, executives/management, manufacturing. Manufacturing was here because there was an educated work force, stable banking, reliable utilities, predictable laws and application of them, and cheap/easy distribution to the largest segment of customers (Americans).

But things changed
* global communication capabilities exploded - management can have a real-time view of sales figures, supply chain, distribution channels and plants all over the world and make decisions that can be immediately implemented at any level (manufacturing, distribution, advertising etc). There's no longer as much of a need to be close to the consumer or factory.

* work forces in many more countries became educated enough to open a plant or office

* utilities (electricity, communications) became reliable enough in many more places

* banks expanded or started in many more places (partly because of the better communication)

* non-US markets became BIG (in number of people who could purchase). The cycle of "build plant"->"hire workers"->"workers can afford product"->"need new plant" that the US had experienced for decades was pretty much over in the US but starting in many places.

* many more countries started competing to be the primary "incorporation-service-provider" of international companies.

* large % of shareholders are not Americans

* and many other things

Companies have to incorporate anywhere they do business. Incorporation (and taxes) are a cost of doing business and the government provides some services for that cost. "Coke" is actually 1000's of separate corporations (or should be - I don't know their details so I'm using them instead of ones I know). Once a company has lots of corporations worldwide and is looking at incorporation as a service, it's a pretty small step to try to minimize that cost by choosing the incorporation-service with the lowest cost as your "headquarters". Finding the best supplier of "incorporation" isn't a lot different than finding the best supplier of ground beef or printer ink - cheapest isn't always best, but you probably don't need the most expensive supplier either. Except with headquarters incorporation, the $$$ are so big that cheapest is best if you can avoid the PR downside.

The US can pass laws to discourage companies to move out of the US, but other countries have a big incentive to encourage the moves. The US isn't just fighting companies who want to move, but competing with counties they could move to. At some point the US will probably need to win the competition, not just try to stop the moves.

[brooklynite]

7. ANSWER: None of these things caused it...

If you have income in the United States, it's taxable under our tax code (which has been revised, but that's another issue). The problem is the growth of global corporations in a global economy. If a company has a subsidiary organized abroad, it's difficult to legally tax them under American law, because there are international agreements that let us tax American subsidiaries of foreign companies.