Allan Sloan angrily denounces U.S. corporations who move their headquarters overseas to avoid taxes in his Fortune article, Positively un-American tax dodges, saying this leaves the rest of us paying their fair share in taxes for the many advantages these companies enjoy here.
Sloan reports the growing exodus a major corporations "threatens to undermine our tax base," with on congressional committee estimating that we will lose $19.5 billion over 10 years, which he thinks vastly underestimates the potential loss.
Yes, leaving the country–a process that tax techies call inversion–is perfectly legal. A company does this by reincorporating in a place like Ireland, where the corporate tax rate is 12.5%, compared with 35% in the U.S. 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.
We’ve also got a second, related problem, which I call the “never-heres.” They include formerly private companies like Accenture ACN -0.61% , a consulting firm that was spun off from Arthur Andersen, and disc-drive maker Seagate STX , which began as a U.S. company, went private in a 2000 buyout and was moved to the Cayman Islands, went public in 2002, then moved to Ireland from the Caymans in 2010. Firms like these can duck lots of U.S. taxes without being accused of having deserted our country because technically they were never here. So far, by Fortune’s count, some 60 U.S. companies have chosen the never-here or the inversion route, and others are lining up to leave. ...
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.
Sloan gets even more angry when he notes that Representative Sandy Levin (D-Mich.) and Senator Carl Levin (D-Mich.) have proposed a bill that would make inversions more difficult which he says has no chance of passage. This bill would only allow inversions if the company is doing substantial business in the country it is moving to and has at least 20% of its ownership living in that country, and the management change.
He also recommend a change in corporate tax law, and a requirement that corporations report the income tax they pay each year and also they amount have accumulated in deferred offshore income, and a tax on such deferred income. He strongly opposes any tax holiday to get corporations to repatriate these dollars.
Sloan's article is well written, informative, and his perspective might lead you to believe you are reading one of our recommend posts rather than an article in Fortune. It is worth a read.