THREE CHEERS FOR TAX INVERSIONS

[Geee]

American Spectator:

Former Chief of Staff for the congressional Joint Committee on Taxation (JCT), Edward Kleinbard, writing in the Wall Street Journal, argues that “tax inversions must be stopped now.”

 

Kleinbard may understand taxes but like so many on the left has a weak grasp on economics and on the proper relationship between a government and its citizens (including those operating within corporations).

 

Tax inversions involve an American company buying a foreign firm in order to move its tax domicile to the lower-tax foreign location. Some of the most common recent inversions involve buying Irish companies.

 

For example, Medtronic, a Minneapolis-based maker of medical devices (especially pacemakers), is buying Covidien which has its tax domicile in Ireland — a country with a 12.5 percent corporate tax rate as compared to the U.S. rate of 35 percent — before the average 4.1 percent state tax rate for a statutory rate of 39.1 percent, the highest in the industrialized world. According to the Minneapolis Star-Tribune, “Medtronic Inc. could avoid $3.5 billion to $4.2 billion in U.S. taxes on funds it holds overseas” as a result of the transaction.

 

Kleinbard isn’t the only critic of these transactions.

 

Senator Ron Wyden (D-OR) calls these deals a “plague” and is pushing for retroactive legislation to end any tax benefits for recent inversion mergers and acquisitions. Says Wyden, “The underlying sickness continues to gnaw away at the American economy with increasing intensity.” Senator Chuck Schumer (D-NY) is focusing on ending the ability of companies which enter into these transactions to deduct interest expenses between foreign and domestic subsidiaries and/or the foreign parent company.

 

[Cyber_Liberty]

FTA:

 

Senator Ron Wyden (D-OR) calls these deals a “plague” and is pushing for retroactive legislation to end any tax benefits for recent inversion mergers and acquisitions. Says Wyden, “The underlying sickness continues to gnaw away at the American economy with increasing intensity.” Senator Chuck Schumer (D-NY) is focusing on ending the ability of companies which enter into these transactions to deduct interest expenses between foreign and domestic subsidiaries and/or the foreign parent company.

These idiots haven't got a freakin' clue about what businesses will do if they try and screw down the lid of the pot, do they? In Medtronic's case, they'll just bug out all of their operations in the US to eliminate exposure to confiscatory tax policies. That would suck for my friends who work there.

 

As an aside, they're really angry with Ireland for being a low-tax country. Why do they always have to bash the Irish?