Goodbye, And Don’t Forget To Write
The Wall St. Journal tells us that 47 US Corporations have reincorporated overseas in the last 10 years, presumably to avoid paying taxes:
A summary released Monday by House Democrats says that 47 U.S. corporations have reincorporated overseas through so-called inversions in the last 10 years. That’s “far more than during the previous 20 years combined,” Democrats say. And there are about a dozen prospective inversion deals involving U.S. corporations looking to reincorporate overseas, according to the data.
The article continues to note that a legislative remedy is not proceeding well, and explains to us what might be motivating the exodus:
So far the legislation isn’t moving very quickly. Republicans and some Democrats say the proposed legislation is too narrow, and could make it even harder to fix the fundamental problems with the U.S. international tax system. Unlike almost all other developed countries, the U.S. still taxes multinationals on their global earnings; most countries tax only domestic earnings, for the most part. The U.S. rate of 35% also is now the highest in the developed world. Many other countries have cut their rates substantially to remain attractive for corporate headquarters.
Please name any US Corporation that actually pays the full 35% rate. I’ve got time.
For so many corporations, not only is the effective rate much, much lower, some pay no taxes at all (fair warning: PDF), and some actually end up having a negative effective tax rate and receive a nice, fat cheque from the IRS.
It’s just a suspicion, of course, but my guess is that regulation is the real issue. I’m sure that lax labor laws and environmental laws is driving a friendly relocation industry. A good corporate tax attorney can come up with a tax loophole, but it is harder to deflect the physical evidence of the pollution around your plant and/or the injured workers.
It’s having lax regulation is what Texas is using to try to bring industry there, after all. Rick Perry tells us about it all the time.