This guy sure is a piece of work. Big time financial reporter at Fortune Magazine.
Inverters don’t hesitate to take advantage of the great things that make America America: our deep financial markets, our democracy and rule of law, our military might, our intellectual and physical infrastructure, our national research programs, all the terrific places our country offers for employees and their families to live. But inverters do hesitate–totally–when it’s time to ante up their fair share of financial support of our system.
Inverting a company, which is done in the name of “shareholder value”–a euphemism for a higher stock price–is way more offensive to me than even the most disgusting (albeit not illegal) tax games that companies like Apple AAPL -0.64% and GE GE -1.42% play to siphon earnings out of the U.S. At least those companies remain American. It may be for technical reasons that I won’t bore you with–but I don’t care. What matters is the result. Apple and GE remain American. Inverters are deserters.
Even though I understand inversion intellectually, I have trouble dealing with it emotionally. Maybe it’s because of my background: I’m the grandson of immigrants, and I’m profoundly grateful that this country took my family in. Watching companies walk out just to cut their taxes turns my stomach.
This article is driven by emotion and charged with patriotism and not common sense. His economic prescrition will do nothing but add more problems to the existing ones that America endures now. America should run a more efficient economy and open up to the world and not the opposite. Repatriating the profits is not the solution to the trillions of budget deficit.
The guy is a jerk and demagog at the same time. He knows nothing about the CBT and his mindset is that everyone who dares to leave America (even if just temporarily) is a traitor who deserves to die and burn in hell. Unfortunately, that’s a mindset majority of Homelanders have.
As Americano says, the solution is to do opposite.
Get rid of the red-tape, heavy tax burden, CBT, and instead of being hateful say something nice to those who decide to leave. That way America will be great and even better than it used to be. Everybody will come and do business in there!
Well if GE didn’t get that four billion dollar tax break because they are so cosy with the Admin they would offshore EVERYTHING as well. It is not
“American” that drives GE’s decisions. It is cronyism at the White House
who look the other way rather than insisting that 4 billion tax bill be paid.
Business is business. When America is unfriendly to business what does he expect business to do? American or otherwise. They will seek the friendliest environment in which to do business. And if that is not the US then the US needs to smarten up. What is this jerk doing writing there anyway. He seems to know absolutely nothing about business or economics.
None of us left the USA because of taxes – it just wasn’t part of the calculation. But inverting corporations are leaving for that reason. So Sloan does have a leg to stand on and doesn’t deserve to be on the hall of shame. Not that I agree with his position. It’s just that the taxation of multinational corporations is a quite different matter from the taxation of ordinary individuals whose lives are solely in one country. We don’t gain by associating ourselves with the likes of Medtronic.
Allen wake up much of the G20 has a standard of living that rivals or exceeds the US – you live in world 1960.
I wonder how long it is going to take for Home lander “PATRIOTS” to see that the USA they love is becoming the tyrant that their ancestors fled from. A new country that does not recognize it’s own founding principles.
BTW corporate taxes affect corporate efficiencies and the individual shareholders and staff . What happens to Corps happens to people.
I think that it is overly moralistic to castigate corporations for leaving to save taxes. Of course they do that! Do you think they are going to move to place where they have to pay more taxes or something? The bottom line is that taxes are one of the cost factors, so if all things else are equal, the corporation is going to move to the lower tax jurisdiction. But there is nothing particularly immoral about that particular action–in isolation. They are simply taking advantage of the structure of the tax code as it exists. The solution is to restructure the tax code in such a way as to attract business rather than to convince businesses to move their financial centres to free countries.
I would like to see some moral basis–i.e., a ground for judgment. For people who condemn those who have moved offshore for tax purposes have moralistic knickers tied in a knot. Yet perhaps the problem is the tax code itself which is immoral and should be made less punitive to those who are able to create wealth.
Actually you have people here regularly complain about the NIIT (3.8% obamacare medicare surtax). People complain about PFIC and phantom gains. People complain about the lack of protection for different pensions and no offsets for some local taxes. Some people say they will exit before they become covered expatriates.
The informational fillings with steep penalties are just taxes in my book.
America thinks the world has no choice but to take it. They appear to be right on this. The whole world looks to have gone for FATCA. Trying to get out is the only pressure on these guys. The people who leave help those of us who are trapped.
They enacted that name and shame list to punish those who leave. Now that the numbers are climbing it’s a millstone around their necks. Can’t wait for the next installment in 2 months.
Never ceases to amuse me when I see knee-jerk articles like this one talking about someone else not paying their “fair share”. I have been examining the stars and studying ancient writ for a long time, but I have yet to find any definitive work on what, precisely, is any particular person’s “fair share” of anything. The word “fair” in relation to corporate tax is an oxymoron since a) they can’t vote; and b) they are owned by people who DO vote and DO pay taxes.
The US practices double taxation as a form of policy. Corporation earns a dollar, pays 35% tax, distributes 65 cents to a shareholder who then pays a further tax on the same income. Samsung sells smartphone in the US and pays income tax on the profit it makes selling smartphones in the US but not on the profits it earns selling them in Europe or Korea. They must, of course, deal with the tax officials in Korea but since the US has the highest corporate tax rates in the world, that is a lighter burden. Apple competes with Samsung. They too pay taxes on their US profits to the US at US rates but they must also pay taxes to the US on their profits in Europe and Korea. Apple is at a very significant competitive disadvantage relative to Samsung since Europe and Korea both have lower corporate tax rates and better integration of corporate income tax to avoid double taxation. America’s only answer to level the playing field is to tell Apple “as long as you never bring your profits home to the US and invest them in the US, we won’t double tax your foreign profits”. What do you suppose rational economic actors do? They under-invest in the United States and dream of inversion. It is inertia, including the unwillingness of US corporate executives to move locations, that prevents the entire S&P 500 from de-camping, not patriotism or economic reason. If not the entire S&P 500 then certainly those elements of it with a material amount of foreign profits. Come to think of it, maybe the fact that US executives can’t move abroad without enduring punitive CBT has something to do with it….
Between uncompetitive corporate tax policies, using the US dollar as a club to bilk allies of billions in fines for failing to follow executive orders from the White House as holy writ, FATCA – the US is doing its level best to give investors reasons to shun it. It is still the world’s largest economy, it is still the source of significant profits for foreign banks, manufacturers etc who have invested there and sell goods and services there. However, if you make it your practice to try to scare away foreign investors night and day long enough, you may eventually succeed.
The simple fact of the matter is money is like water – it flows where it circulates with maximum freedom. Every system imposes limitations on its free circulation – the equivalent of pebbles and rocks in a stream. When the pebbles become boulders and the boulders block the stream, it overflows and seeks a new channel. Once, the US was the freeest, fastest moving stream and it found that it attracted water from surrounding streams and rivers that were obstructed. Now that it has become a big river, it has been dumping boulders, cement blocks and other obstructions in the naive belief that it will continue to flow as freely as it once did because isn’t it a mighty river?
Maybe these companies are realizing that they fare no better at changing the unfair tax system than we do, and that is why they’re inverting?
Waving the flag and calling these guys tax cheaters are simply not going to cut it anymore, and peddling that ridiculous 19th century CBT type mentality in this 21st century globalized world is not going to work anymore. All that matters at this point, is whether or not the US gets its head out of its ass and reform their tax code before, or after, the US dollar ceases to be the world’s reserve currency.
It’s simple f—ing math, guys! Why pay 35% when you don’t have to?!?
Thx- that was clear and logical.
I agree, comparing corporations to people is like comparing apples to oranges. Even if the US exercised RBT, how many of us would pay less in taxes living outside the US? Corporations are profit driven, whereas human beings are quality of life driven.
Much of the homelanders anger with us may come from having to accept that even with higher taxes we prefer to live outside the US for the quality of life. That must hurt when you want to believe you’re the prettiest girl in the room.
I can understand where he is coming from when the company is based in the U.S. however when it comes to people like me who have never lived in the U.S. as an adult and do not enjoy any of the so called benefits of being an actual U.S. citizen but am expected to “pay” for those rights and privileges I become frustrated and angry. This entire fiasco is going to do nothing but cost me huge sums of money that I cannot afford to accountants and lawyers, some Canadian and some American. Chances are the U.S. will see no money from me at all and I will actually cost them money to become compliant and renounce. It would be great if they would come up with a program where the little guys like me could send in our information without costing us and them a fortune and putting their efforts into the tax evaders in their own country first!
I bet you that if the US decided to cut its corporate tax rate by 20%, that they would likely get more tax money for it, and that many corporations would probably want to reincorporate back stateside.
Drop it another 5%, add a 5% federal tax on all sales, and then dump CBT for RBT, Watch things start to really turn around over there. ;^)
It is so simple, that they’ll never be able to wrap their heads around it, let alone implement it.
As for the prettiest girl in the room analogy, if the prettiest girl in the room is psycho, high maintenance, self centred, full of drama, and has severe jealousy issues, then pretty much any guy that has a bit of sense, and knows what he wants, would rather pick the ugly girl that will simply love him, and treat him like an equal partner.
Hear, here, Trina!
Even in our case where they’ve gained in tax a share of our retirement savings, I feel pretty confident that after 2 1/2 years of shuffling our OVDI box from desk to desk waiting for some kind of direction from the policy makers above, they’ve netted US Treasury little gain from our “fair share”. And that doesn’t even begin to cover what it’s cost them in good will around the world.
There you go again, to quote a great American. You and most undereducated politicians pretend or actually believe that Corporations actually pay taxes. What they do is collect them and send them to the government and add every penny of all cost into the price of their product. Continuing to use companies as the conduit of taxes allows some large companies to collect the taxes from their customers and keep them as their very own money. That is the fault of politicians and it will continue to happen as long as they persist in the belief that they can somehow get the money. They cannot ever get the tax money unless they design a system that is not dependent on the honesty of large corporations and rich individuals. Oh Pardon me! There has been a system designed to do just that and you and all the weak kneed, weak minded politicians of both parties won’t even take a good look much less adopt it.
The idea that taxation of citizens no mater where they are in the world, drives the rich companies and rich individuals out of the country and attracts low education, low income people in, as the rich exit.
It is none of your business where capital is invested and when you wake up and pass the FairTax, you will lose control of the campaign contributions used to keep a bunch of old farts in office, and save the nation. We need the rich to provide jobs, we need corporations to provide jobs, we need no income taxes to be competative in the export of manufactured goods, we need capital to be able to be invested where ever it can earn the best return and with capitalism instead of Marxist Income Taxes it would be in The Good Old U.S.A.
Details aside, I agree 100 percent with this article.