From Real Clear Markets:
Those are the real issues behind the Treasury’s latest militant attack on so-called tax inversions, where a U.S. company merges with a foreign firm in order to take advantage of the foreign firm’s lower corporate tax rate. In this case, the attack is aimed at Pfizer, pending the $160 billion takeover of Allergan. Allergan is based in Ireland, which has a 12.5 percent corporate tax rate. Pfizer is based in New York. So the new combined entity will pay the Irish corporate rate, which is nearly three times less than the 35 percent U.S. federal corporate rate. Obviously, a huge savings.
The answer here is simple: Slash the U.S. corporate tax rate and then the problem goes away. It’s by far the highest of the major countries worldwide. We are not competitive. Canada is 15 percent, China is 25 percent and Europe averages 25 percent. These companies owe it to their shareholders and their work forces to act in a fiduciarily responsible manner. But no, Team Obama wants to wage war against them.
So here’s a question: Why does Obama want to punish business, rather than reward it? Why doesn’t this administration want America to be the top global destination for investment? Why not have the U.S. win the global race for capital instead of losing.
Read more at Real Clear Markets.
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