"What’s behind Obama’s war on corporate ‘deserters’?"

[applegrove]

What’s behind Obama’s war on corporate ‘deserters’?

Corporate America’s share of the financial burden of running the U.S. has steadily dropped from about 25 per cent in the 1950s to a current 7 per cent or so.

By: David Olive at the Toronto Star

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The “inverter” tax dodgers include household names like Carnival Corp., world’s biggest cruise line operator (head office: Miami; tax residence: Panama); Ingersoll Rand PLC, a huge North Carolina-based maker of heavy equipment (tax residence: Ireland); Nabors Industries Ltd. of Houston, a leading oil and gas drilling company (tax residence: Bermuda); Eaton PLC, the venerable Cleveland-based maker of circuit breakers, truck transmissions and other industrial equipment (tax residence: Ireland), and Garmin Ltd. of Kansas, a leading maker of global positioning systems (GPS) whose tax residence is Switzerland.


The ironies abound here. For engineering and technical talent, Ingersoll Rand continues to recruit heavily from a U.S. armed forces it pays not a dime to finance. Garmin’s GPS systems were invented by the U.S. government, and the contract that first got the firm off the ground was from the U.S. Army. The CEO of Eaton told his hometown City Club of Cleveland in a speech that the cure for the U.S. deficit is to cut tax loopholes. That Eaton’s own 2013 profits of $1.8 billion were taxed at the Irish rate of 12.5 per cent is not, in his mind at least, a deficit-bloating loophole.


There is now a considerable backlash against the inverters. The tipping point came recently with the planned but ultimately failed mega-merger of New York-based Pfizer Inc. and the U.K’s AstraZeneca PLC to create the world’s largest Big Pharma combine, which for tax purposes would have been domiciled in Britain with its 20 per cent corporate tax rate. And this month, Walgreen Co., the leading U.S. drugstore chain, merged with its British counterpart Alliance Boots PLC but dropped plans to take up British tax residence for a combined entity that would have continued to be run from Walgreen’s head office in suburban Chicago.


On the campaign trail ahead of this fall’s Congressional elections, Barack Obama, the U.S. president, has laid into the inverters as “corporate deserters” lacking “economic patriotism.” The U.S. Treasury Secretary warned this week that the Obama administration is prepared to act unilaterally, without Congress, to rein in the ambit of inverting companies in what is still their U.S. home market. Before its change of heart on inverting, Walgreen got a nasty letter from Dick Durbin, senior U.S. Senator from the firm’s home state of Illinois, warning that Walgreen might find its customers are “deeply patriotic and will not support Walgreen’s decision to turn its back on the United States.”





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[conservaphobe]

1. K&R nt