Tuesday, June 17, 2014

Flight from taxes...

Flight from taxes...  This morning's Wall Street Journal has a good piece on one of the presumably unintended consequences of American corporate tax policy: the rather large incentive it creates for successful (that is, profitable) American-based corporations to leave the U.S.  Here's a couple of key paragraphs:
But shareholders of all companies—including employees who care about where economic growth will occur in the future—should know that America's federal corporate tax rate is 35%, which when combined with state and local levies rises to an average of nearly 40%. Ireland, where politicians evidently care about economic growth and as far as we know don't seek to stifle free speech on the topic, has a corporate tax rate of 12.5%. 

Almost alone among civilized nations, Washington also demands to be paid on a company's world-wide earnings, rather than on money earned in the U.S. This tax is due whenever a company's overseas earnings are returned to America. Medtronic has about $14 billion overseas and rather than bringing it home and triggering the tax, the company will use the money to fund most of the cash portion of its $42.9 billion purchase. 
Will politicians pay attention?  Not very damned likely.

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