2014 April 28 Monday
American Companies Buy Foreign Companies To Escape USA
Drug giant Pfizer is going to buy drug giant AstraZeneca as a way to leave behind American corporate taxes. American companies can use their money parked abroad to buy foreign companies and move abroad:
The law allows companies to move overseas if, after a merger or acquisition, foreign shareholders own more than 20 percent of the company.
What they get: lower taxes. What Americans get: fewer job opportunities and more taxes.
Lots of American oil companies have abandoned their American corporate citizenship including Ensco, Rowan, Noble, Weatherford International, and Transocean. Other ex-American companies include Applied Materials, Eaton, Perrigo, Actavis, Tyco, Ingersoll-Rand, and Fruit of the Loom.
Before you resent these corps ask yourself this question: If you could continue to make as much money abroad but at a much lower tax rate would you do it?
By Randall Parker at 2014 April 28 09:53 PM
This is like asking if you could get a hotter wife now that your both older, should you just ditch your wife.
I was going to say: the answer is simple and is a counter-question: do you have any concern moderating your financial motivation, such as care for your country i.e. countrymen? I know the cynical answer, but the question remains.
In other words, Parker, your question is insufficient to cover all the factors.
Though I concede--the owners of these companies would disagree with me.
Parker I think you are aptly describing their thinking, justifying it is quite another matter.
Why is our corporate tax rate 35%? Very few big companies even pay this rate. Lower it to 15% and make it the statutory minimum and maximum tax (to avoid the issue of subsequent regulations giving ways around it). Make everyone pay.
I think it's foolish to expect companies to care about this country, but the reality is that the US is the #1 market to be in...and if you want to play, you have to pay. That's business.
In practice, the US corporate tax rate is not particularly high. Effective rate, averaged over several years, is about 23%. Another calculation, from the Congressional Research Service, found that the effective US corporate tax rate was 27.1%, compared to an weighted average of 27.7% in the OECD ( minus the US).
In practice, you can pretty much assume that every common political talking point is a lie. So check things out.
I am not the only one hoping for a zombie (minority) apocalypse.
The irony being that the US is the country where Big Pharma makes by far the largest share of its profits, thanks to the absence of price controls via monopsonistic government buying power.
A return to high tariffs can't be far behind.