Aa
Great American companies fleeing.....
Let's keep raising corporate taxes---until all the great American companies flee to more tax friendly countries.
Pfizer's Tax Takeover
Spend $100 billion abroad rather than pay 40% at home.
Updated April 30, 2014 4:18 p.m. ET
U.S. pharmaceutical giant Pfizer Inc. PFE -1.51% wants to buy AstraZeneca, AZN.LN +1.01% and not just for its pipeline of cancer drugs. Acquiring the British company would also give Pfizer shareholders welcome relief from a U.S. corporate tax rate that is among the world's highest. Instead of paying punitive rates to return its money to the U.S., Pfizer figures it can get a better return paying $100 billion or so to buy a foreign company.
Pfizer Chairman and CEO Ian Read took pains on a Monday call with securities analysts to say that the "primary drivers" behind his merger attempt are the "improved growth prospects we see in the innovative businesses and the redundancies we can take out." In other words, Pfizer aims for a combined firm to stake out leading positions in immunology, oncology, vaccines and chronic diseases. This is what companies always say, and it may turn out to be true, though so far AZ is resisting Pfizer's entreaties.
Bloomberg
But Pfizer's presentation also noted the deal would be "structured to achieve an efficient tax structure." Mr. Read noted the "negative impact" of the U.S. tax code, which would be "problematical" if applied to the money AstraZeneca now earns in the U.K.
That's because the combined state-federal corporate income tax rate in the U.S. is nearly 40%, compared to the 21% rate in the U.K. Though Pfizer is a U.S. company, more than 70% of its cash—amounting to more than $35 billion—is sitting overseas. To bring it back home would expose shareholders to the punitive U.S. rate. Instead, Pfizer aims to use some of that cash pile to finance the merger, and Mr. Read also plans to domicile the new combined holding company in the U.K., though its headquarters would remain in New York.
Can anyone blame him? We call the U.S. business tax rate "among" the world's highest because, outside of places like North Korea that don't allow private business, it's nearly impossible to find a more punitive rate than the 40% inflicted in the U.S.
Surveying the rates in more than 130 countries, the accountants at KPMG did manage to find one jurisdiction with a higher headline number. The top rate in the United Arab Emirates is 55%, but it comes along with a big asterisk because it is generally applied only to foreign oil companies.
The U.S., almost alone among the world's governments, demands to be paid on a company's world-wide profits whenever those profits are brought back to the U.S. And that's why it makes sense for Pfizer to spend its overseas cash—overseas.
There's a leftist canard that the high U.S. statutory rate doesn't matter because most companies use loopholes and deductions to pay lower rates. That is true for some companies, and we're all for killing loopholes while cutting the headline rate. But Pfizer's case shows that shareholders and the U.S. economy are paying a heavy price under the current U.S. code. In recent years the company has been paying effective tax rates in the U.S. of nearly 30%. That's above even the average global headline rate of 24%.
Corporate mergers ought to be driven by business opportunities, not tax arbitrage. And the goal of U.S. tax policy should be to encourage companies to invest in America, not everywhere else.
http://online.wsj.com/news/articles/SB10001424052702303939404579529752700300172?mod=yahoo_hs&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303939404579529752700300172.html%3Fmod%3Dyahoo_hs
Pfizer's Tax Takeover
Spend $100 billion abroad rather than pay 40% at home.
Updated April 30, 2014 4:18 p.m. ET
U.S. pharmaceutical giant Pfizer Inc. PFE -1.51% wants to buy AstraZeneca, AZN.LN +1.01% and not just for its pipeline of cancer drugs. Acquiring the British company would also give Pfizer shareholders welcome relief from a U.S. corporate tax rate that is among the world's highest. Instead of paying punitive rates to return its money to the U.S., Pfizer figures it can get a better return paying $100 billion or so to buy a foreign company.
Pfizer Chairman and CEO Ian Read took pains on a Monday call with securities analysts to say that the "primary drivers" behind his merger attempt are the "improved growth prospects we see in the innovative businesses and the redundancies we can take out." In other words, Pfizer aims for a combined firm to stake out leading positions in immunology, oncology, vaccines and chronic diseases. This is what companies always say, and it may turn out to be true, though so far AZ is resisting Pfizer's entreaties.
Bloomberg
But Pfizer's presentation also noted the deal would be "structured to achieve an efficient tax structure." Mr. Read noted the "negative impact" of the U.S. tax code, which would be "problematical" if applied to the money AstraZeneca now earns in the U.K.
That's because the combined state-federal corporate income tax rate in the U.S. is nearly 40%, compared to the 21% rate in the U.K. Though Pfizer is a U.S. company, more than 70% of its cash—amounting to more than $35 billion—is sitting overseas. To bring it back home would expose shareholders to the punitive U.S. rate. Instead, Pfizer aims to use some of that cash pile to finance the merger, and Mr. Read also plans to domicile the new combined holding company in the U.K., though its headquarters would remain in New York.
Can anyone blame him? We call the U.S. business tax rate "among" the world's highest because, outside of places like North Korea that don't allow private business, it's nearly impossible to find a more punitive rate than the 40% inflicted in the U.S.
Surveying the rates in more than 130 countries, the accountants at KPMG did manage to find one jurisdiction with a higher headline number. The top rate in the United Arab Emirates is 55%, but it comes along with a big asterisk because it is generally applied only to foreign oil companies.
The U.S., almost alone among the world's governments, demands to be paid on a company's world-wide profits whenever those profits are brought back to the U.S. And that's why it makes sense for Pfizer to spend its overseas cash—overseas.
There's a leftist canard that the high U.S. statutory rate doesn't matter because most companies use loopholes and deductions to pay lower rates. That is true for some companies, and we're all for killing loopholes while cutting the headline rate. But Pfizer's case shows that shareholders and the U.S. economy are paying a heavy price under the current U.S. code. In recent years the company has been paying effective tax rates in the U.S. of nearly 30%. That's above even the average global headline rate of 24%.
Corporate mergers ought to be driven by business opportunities, not tax arbitrage. And the goal of U.S. tax policy should be to encourage companies to invest in America, not everywhere else.
http://online.wsj.com/news/articles/SB10001424052702303939404579529752700300172?mod=yahoo_hs&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303939404579529752700300172.html%3Fmod%3Dyahoo_hs
http://www.huffingtonpost.com/rep-bernie-sanders/a-choice-for-corporate-am_b_2652176.html
"Here's the simple truth. You can't be an American company only when you want a massive bailout from the American people. You have also got to be an American company, and pay your fair share of taxes, as we struggle with the deficit and adequate funding for the needs of the American people. If Wall Street and corporate America don't agree, the next time they need a bailout let them go to the Cayman Islands, let them go to Bermuda, let them go to the Bahamas and let them ask those countries for corporate welfare."
(Full text)
"When the greed, recklessness, and illegal behavior on Wall Street drove this country into the deepest recession since the 1930s, the largest financial institutions in the United States took every advantage of being American. They just loved their country -- and the willingness of the American people to provide them with the largest bailout in world history. In 2008, Congress approved a $700 billion gift to Wall Street. Another $16 trillion in virtually zero interest loans and other financial assistance came from the Federal Reserve. America. What a great country.
But just two years later, as soon as these giant financial institutions started making record-breaking profits again, they suddenly lost their love for their native country. At a time when the nation was suffering from a huge deficit, largely created by the recession that Wall Street caused, the major financial institutions did everything they could to avoid paying American taxes by establishing shell corporations in the Cayman Islands and other tax havens.
In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis.
On and on it goes. Wall Street banks and large companies love America when they need corporate welfare. But when it comes to paying American taxes or American wages, they want nothing to do with this country. That has got to change.
Offshore tax abuse is not just limited to Wall Street. Each and every year corporations and the wealthy are avoiding more than $100 billion in U.S. taxes by sheltering their income offshore.
Pharmaceutical companies like Eli Lilly and Pfizer have fought to make it illegal for the American people to buy cheaper prescription drugs from Canada and Europe. But, during tax season, Eli Lilly and Pfizer shift drug patents and profits to the Netherlands and other offshore tax havens to avoid paying U.S. taxes.
Apple wants all of the advantages of being an American company, but it doesn't want to pay American taxes or American wages. It creates the iPad, the iPhone, the iPod, and iTunes in the United States, but manufactures most of its products in China so it doesn't have to pay American wages. Then it shifts most of its profits to Ireland, Luxembourg, the British Virgin Islands and other tax havens to avoid paying U.S. taxes. Without such maneuvers, Apple's federal tax bill in the United States would have been $2.4 billion higher in 2011.
Offshore tax schemes have become so absurd that one five-story office building in the Cayman Islands is now the "home" to more than 18,000 corporations.
This tax avoidance does not just reduce the revenue that we need to pay for education, healthcare, roads, and environmental protection, it is also costing us millions of American jobs. Today, companies are using these same tax schemes to lower their tax bills by shipping American jobs and factories abroad. These tax breaks have contributed to the loss of more than 5 million U.S. manufacturing jobs and the closure of more than 56,000 factories since 2000. That also has got to change.
At a time when we have a $16.5 trillion national debt; at a time when roughly one-quarter of the largest corporations in America are paying no federal income taxes; and at a time when corporate profits are at an all-time high; it is past time for Wall Street and corporate America to pay their fair share.
That's what the Corporate Tax Dodging Prevention Act (S.250) that I have introduced with Rep. Jan Schakowsky (D-Ill.) is all about.
This legislation will stop profitable Wall Street banks and corporations from sheltering profits in the Cayman Islands and other tax havens to avoid paying U.S. taxes. It will also stop rewarding companies that ship jobs and factories overseas with tax breaks. The Joint Committee on Taxation has estimated in the past that the provisions in this bill will raise more than $590 billion in revenue over the next decade.
As Congress debates deficit reduction, it is clear that we must raise significant new revenue. At 15.8 percent of GDP, federal revenue is at almost the lowest point in 60 years. Our Republican colleagues want to balance the budget on the backs of the elderly, the sick, the children, the veterans and the most vulnerable by making massive cuts. At a time when the middle class already is disappearing, that is not only a grossly immoral position, it is bad economics.
We have a much better idea. Wall Street and the largest corporations in the country must begin to pay their fair share of taxes. They must not be able to continue hiding their profits offshore and shipping American jobs overseas to avoid taxes.
Here's the simple truth. You can't be an American company only when you want a massive bailout from the American people. You have also got to be an American company, and pay your fair share of taxes, as we struggle with the deficit and adequate funding for the needs of the American people. If Wall Street and corporate America don't agree, the next time they need a bailout let them go to the Cayman Islands, let them go to Bermuda, let them go to the Bahamas and let them ask those countries for corporate welfare."
"Here's the simple truth. You can't be an American company only when you want a massive bailout from the American people. You have also got to be an American company, and pay your fair share of taxes, as we struggle with the deficit and adequate funding for the needs of the American people. If Wall Street and corporate America don't agree, the next time they need a bailout let them go to the Cayman Islands, let them go to Bermuda, let them go to the Bahamas and let them ask those countries for corporate welfare."
(Full text)
"When the greed, recklessness, and illegal behavior on Wall Street drove this country into the deepest recession since the 1930s, the largest financial institutions in the United States took every advantage of being American. They just loved their country -- and the willingness of the American people to provide them with the largest bailout in world history. In 2008, Congress approved a $700 billion gift to Wall Street. Another $16 trillion in virtually zero interest loans and other financial assistance came from the Federal Reserve. America. What a great country.
But just two years later, as soon as these giant financial institutions started making record-breaking profits again, they suddenly lost their love for their native country. At a time when the nation was suffering from a huge deficit, largely created by the recession that Wall Street caused, the major financial institutions did everything they could to avoid paying American taxes by establishing shell corporations in the Cayman Islands and other tax havens.
In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis.
On and on it goes. Wall Street banks and large companies love America when they need corporate welfare. But when it comes to paying American taxes or American wages, they want nothing to do with this country. That has got to change.
Offshore tax abuse is not just limited to Wall Street. Each and every year corporations and the wealthy are avoiding more than $100 billion in U.S. taxes by sheltering their income offshore.
Pharmaceutical companies like Eli Lilly and Pfizer have fought to make it illegal for the American people to buy cheaper prescription drugs from Canada and Europe. But, during tax season, Eli Lilly and Pfizer shift drug patents and profits to the Netherlands and other offshore tax havens to avoid paying U.S. taxes.
Apple wants all of the advantages of being an American company, but it doesn't want to pay American taxes or American wages. It creates the iPad, the iPhone, the iPod, and iTunes in the United States, but manufactures most of its products in China so it doesn't have to pay American wages. Then it shifts most of its profits to Ireland, Luxembourg, the British Virgin Islands and other tax havens to avoid paying U.S. taxes. Without such maneuvers, Apple's federal tax bill in the United States would have been $2.4 billion higher in 2011.
Offshore tax schemes have become so absurd that one five-story office building in the Cayman Islands is now the "home" to more than 18,000 corporations.
This tax avoidance does not just reduce the revenue that we need to pay for education, healthcare, roads, and environmental protection, it is also costing us millions of American jobs. Today, companies are using these same tax schemes to lower their tax bills by shipping American jobs and factories abroad. These tax breaks have contributed to the loss of more than 5 million U.S. manufacturing jobs and the closure of more than 56,000 factories since 2000. That also has got to change.
At a time when we have a $16.5 trillion national debt; at a time when roughly one-quarter of the largest corporations in America are paying no federal income taxes; and at a time when corporate profits are at an all-time high; it is past time for Wall Street and corporate America to pay their fair share.
That's what the Corporate Tax Dodging Prevention Act (S.250) that I have introduced with Rep. Jan Schakowsky (D-Ill.) is all about.
This legislation will stop profitable Wall Street banks and corporations from sheltering profits in the Cayman Islands and other tax havens to avoid paying U.S. taxes. It will also stop rewarding companies that ship jobs and factories overseas with tax breaks. The Joint Committee on Taxation has estimated in the past that the provisions in this bill will raise more than $590 billion in revenue over the next decade.
As Congress debates deficit reduction, it is clear that we must raise significant new revenue. At 15.8 percent of GDP, federal revenue is at almost the lowest point in 60 years. Our Republican colleagues want to balance the budget on the backs of the elderly, the sick, the children, the veterans and the most vulnerable by making massive cuts. At a time when the middle class already is disappearing, that is not only a grossly immoral position, it is bad economics.
We have a much better idea. Wall Street and the largest corporations in the country must begin to pay their fair share of taxes. They must not be able to continue hiding their profits offshore and shipping American jobs overseas to avoid taxes.
Here's the simple truth. You can't be an American company only when you want a massive bailout from the American people. You have also got to be an American company, and pay your fair share of taxes, as we struggle with the deficit and adequate funding for the needs of the American people. If Wall Street and corporate America don't agree, the next time they need a bailout let them go to the Cayman Islands, let them go to Bermuda, let them go to the Bahamas and let them ask those countries for corporate welfare."
"American-based corporations are giving up their U.S. citizenship and heading abroad for lower taxes and to tap into cash they’ve parked outside the U.S. (Pfizer and Omnicom, both American companies, now want to be a British because of lower rates there; Walgreens may be heading to Europe as well.) I say: Fine, but if you do so you’re no longer American citizens under the First Amendment, and have no right to lobby or bribe American legislators with campaign cash (the Supreme Court said corporations are people, but non-American citizens can't lobby or make campaign contributions). Congress should enact legislation making this crystal clear. You agree?"
Robert Reich
Robert Reich
I wasn't thinking of that type of quality control, but yes, that needs to be there, as well as consumer safety - remember the dog food produced with products from China and which contained melamine?
Yes, quality control and inspections to be sure workers are treated right.
( No more sweat shop collapses like in Bangladesh and no limited bathroom breaks that force women into wearing Depends to work and landing up with bladder infections)
( No more sweat shop collapses like in Bangladesh and no limited bathroom breaks that force women into wearing Depends to work and landing up with bladder infections)
Astra Zeneca has rejected the offer.
http://apnews.myway.com//article/20140502/britain-pfizer-astrazeneca-9deeb9e9f2.html
http://apnews.myway.com//article/20140502/britain-pfizer-astrazeneca-9deeb9e9f2.html
"Corporations are fleeing because they can make more money hiring people for pennies in third world countries. That is the problem. We need to have tariffs of some kind and get those greedy guys under control."
We agree!! but we need to add quality control to the mix to make sure everything is done right..
We agree!! but we need to add quality control to the mix to make sure everything is done right..
Corporations are fleeing because they can make more money hiring people for pennies in third world countries. That is the problem. We need to have tariffs of some kind and get those greedy guys under control.
Can you pay less taxes than that? no fed taxes is a little hard to lower isnt it?
http://www.huffingtonpost.com/2012/04/10/fortune-500-companies-tax-break_n_1413263.html
"More than two dozen Fortune 500 companies paid no U.S. federal income taxes in recent years partly because of a corporate tax break that is broadly supported by Republicans and Democrats alike, a consumer group said on Monday.
In at least half of the cases cited by the group, companies made use of accelerated depreciation, a tax provision that allows increased deductions in the early years of the life of an asset.
Citizens for Tax Justice, which advocates steeper corporate taxes, said it surveyed major U.S. companies and found that 26 on average paid no net federal income taxes between 2008 and 2011, among them General Electric and Duke Energy .
"This isn't fair to the rest of us," said Bob McIntyre, director of the left-leaning tax research group........"
http://www.informationclearinghouse.info/article15704.htm
How Multinational Corporations Avoid Paying Their Taxes
"Drug companies and other multinational companies based in the U.S. systematically avoid paying tax in the U.S. on their profits. The companies elect to realize profits in low-tax countries and because of this the rest of us have to pay billions of unnecessary taxes to make up for the shortfall, writes Peter Rost, an ex-pharmaceutical executive.........."
"More than two dozen Fortune 500 companies paid no U.S. federal income taxes in recent years partly because of a corporate tax break that is broadly supported by Republicans and Democrats alike, a consumer group said on Monday.
In at least half of the cases cited by the group, companies made use of accelerated depreciation, a tax provision that allows increased deductions in the early years of the life of an asset.
Citizens for Tax Justice, which advocates steeper corporate taxes, said it surveyed major U.S. companies and found that 26 on average paid no net federal income taxes between 2008 and 2011, among them General Electric and Duke Energy .
"This isn't fair to the rest of us," said Bob McIntyre, director of the left-leaning tax research group........"
http://www.informationclearinghouse.info/article15704.htm
How Multinational Corporations Avoid Paying Their Taxes
"Drug companies and other multinational companies based in the U.S. systematically avoid paying tax in the U.S. on their profits. The companies elect to realize profits in low-tax countries and because of this the rest of us have to pay billions of unnecessary taxes to make up for the shortfall, writes Peter Rost, an ex-pharmaceutical executive.........."
I see you have your tin foil hat on this morning. If I'm not mistaken, this is the 16 th major US company to "flee" our high corporate tax rates.
"........the "primary drivers" behind his merger attempt are the "improved growth prospects we see in the innovative businesses and the redundancies we can take out." In other words, Pfizer aims for a combined firm to stake out leading positions in immunology, oncology, vaccines and chronic diseases........"
So this basically an op-ed piece by a boo-hoo, want-something-for-nothing, tax whiner.
What may actually be driving pharmaceutical companies to leave the States is that it's becoming cost prohibitive to dump their waste into our watersheds and their workers are becoming more aware of the dangers of working in their plants. I say if they want to launder their profits overseas, cut out the middleman. Set up their factories on the shores of Lake Geneva and use economic refugees coming over from Tripoli to work in them. Oh but wait. The Swiss wouldn't let them do that.
So this basically an op-ed piece by a boo-hoo, want-something-for-nothing, tax whiner.
What may actually be driving pharmaceutical companies to leave the States is that it's becoming cost prohibitive to dump their waste into our watersheds and their workers are becoming more aware of the dangers of working in their plants. I say if they want to launder their profits overseas, cut out the middleman. Set up their factories on the shores of Lake Geneva and use economic refugees coming over from Tripoli to work in them. Oh but wait. The Swiss wouldn't let them do that.
Reward companies for bringing jobs back to America? Nah lets keep them overseas instead of doing something that can really create jobs.
Did anyone also hear about Apple's new bond issuance to basically a pay a dividend to it's shareholders? Cheaper to borrow new money than repatriate all that cash ($100B+) sitting overseas. Doesn't matter where you, an individual or a corporation earns it's profit---uncle sam wants a cut.
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