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Allan Sloan, editor-at-large for Fortune magazine, is angry.

And with good reason: He is upset at a lot of U.S. corporate executives who are engaging in “inversion.” This is the process of moving the location of incorporation to a tax haven and skipping out on paying U.S. taxes (short list here). Even though the company is still headquartered in the U.S. and derives much of its revenue and profits here, the company becomes a foreign entity.

In a cover story this month titled “Positively un-American tax dodges,” he writes: “All of this threatens to undermine our tax base, with projected losses in the billions. It also threatens to undermine the American public’s already shrinking respect for big corporations.” He is as angrier at corporate America than he has been any time since the financial crisis, and you should be too. “The spectacle of American corporations deserting our country to dodge taxes while expecting to get the same benefits that good corporate citizens get” is unacceptable. continues here

Category: Corporate Management, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

5 Responses to “Freeriding Corporations Need to Pay their Fair Share”

  1. rd says:

    You left one big idea off your list – move to a VAT tax system. Many of the countries they are moving to don’t have high corporate tax rates because they charge a VAT on every transaction, including services. So the companies are actually doing a double-dip tax avoidance as they move their headquarters to low income tax countries that they don’t do a lot of transaction in.

    A VAT system with a dramatically reduced corporate income (say equal to capital gains tax rate but on worldwide income allowing deductions for other countries’ taxes and dividend payouts) would mean that companies, including foreign ones, doing a lot of business in the US would pay significant taxes regardless of their domicile. This way we could fund the Pax Americana the world depends on right now.

  2. Concerned Neighbour says:

    I like most of your ideas, but disagree with a one-time low tax rate for repatriation of profits. This strikes me as a reward for years of bad behavior. Granted rewarding bad behavior is all the rage with fiscal and especially monetary policy these days, so that would fit right in.

  3. wally says:

    Allan has a good point.
    I live fairly close to the Medtronic HQs and regard this move by them as equivalent to backstabbing. They’ll physically stay in the US, of course, protected by US military and US courts, served by US highways, US rail systems, consuming US energy, hiring grads of US educational systems, providing employees with US regulated health insurance, selling to US markets, having products protected by US patents… but not paying US taxes.

  4. VennData says:

    Why doesn’t GOP voter get that this system makes their taxes and their share of the debt go up?

    Why can’t GOP voter make that connection?
    Why can’t GOP voter stop patronizing these “deserters?”
    Why can’t GOP voter think?

    …because Obama took your gun? Your family farm? Made you Islamic? Oh OK, you go GOP voter. THe House won’t stop inversions in the

    Democrats are DOING something about these deserters. Are you?

    http://www.law360.com/articles/553942/dems-tie-inversion-reform-to-highway-trust-fund

  5. Singmaster says:

    Barry Ritholtz once posted a Carl Richards graphic and I have it posted on the wall in my office. It is a Venn diagram showing “Within My Control” and “Things that Matters” with the overlap showing “What You should FOCUS on.”
    http://www.ritholtz.com/blog/2013/05/what-do-you-control/

    Congress will do nothing unless it has to.
    But, and I do not know the answer to this, can popular opinion sway S&P to change their index composition?
    Can a social media petition force S&P and Russell to remove the tax dodgers from their indexes?

    That would cause a seismic shift. The impact of being removed from the S&P500 would force corporations to re-think their strategy. That force would be strong enough to force tax reform because the corporations would have an incentive to lobby Congress for change.

    I could start a petition but no one knows me. I don’t have a following. Nothing would happen.

    But you…Barry Ritholtz, you, could meddle with the primal forces of nature.

    Maybe I’m wrong. If we’re wrong, then nothing happens. We’ll go on. Peacefully. Quietly. We’ll enjoy it.
    But if we’re right, and we can stop this thing… Barry… you will have saved the dollars of millions of registered taxpayers.

    Help us Barry Ritholtz. You are our only hope.