14 Aug 2014

In the USA, policymakers say they are attempting to halt a recent rise in the corporate practice known as “INVERSION”. A glaring example is a 207% spike in health care industry inversions during 2013. Why are such corporations renouncing the USA? TAX AVOIDANCE, that’s why! Profits made in the United States are subject to USA Corporate taxes of of almost 40 % ; On the other hand, profits earned in foreign markets often have a much lower lower tax rate; so, Corporations then claim that country as its primary home to achieve a lower tax rate. It is recognized that some some inversions in the USA occur naturally from traditional business mergers. Naturally, USA taxpayers are loudly expressing a rejection of such practices In response to online petitions, Walgreens decided last week that it would not seek an inversion as part of its purchase of the Swiss-based company Alliance Boots. Strangely, in Spanish “inversion” translates simply: “an investment”. The “fatcats” are never satisfied. We say again they seem to have no sense of ethics/morality, but are driven by greed. They seem to forget the lesson of the early Industrialists of America who ultimately gave much of their profit back to the people. It seems that near the end of their life, they realized you can’t take it with you, and wanted to leave a good legacy. Even so, none of them ever gave up their USA citizenship to evade taxes.

WHAT IS A “FOR PROFIT CORPORATION”? By definition, they are Anonymous Societies referred to as: Inc., and  as “SA” in most of the world. The important thing to know is that corporations enjoy sundry governmental protections and privileges granted them by the government in which they incorporate. In the USA for instance, such protections/privileges vary broadly by the State of incorporation (their corporate home). Pres Obama recently said of corporations: “a fortunate few (who) play by their own rules” That is a truism, and perhaps the main reason why corporations exist. There are also Non-Profit Organizations (NPOs); These corporations pay no taxes at all, and in the USA are governed by Internal Revenue Code 501(c) (3). Naturally, there are millions of NPOs in the USA; These include Churches, beneficent, and other Civil Societies (as NPOs are known in other parts of the world). No wonder our Treasury Department is in its current quandary.


President Barack Obama, In a recent video addressed, criticized corporate tax inversions calling them a: “renunciation of citizenship…Rather than double down on the top-down economics that let a fortunate few play by their own rules, let’s embrace an economic patriotism that says we rise or fall together, as one nation and as one people”.

Ron Wyden (D-OR), and Senate Finance Committee Chairman, called the increase in inversions a symptom of a broken tax system. He added: “The USA tax code is infected with the chronic diseases of loopholes and inefficiency. These infections are hobbling America’s drive to create more good-wage, red-white-and-blue jobs here at home. They are a significant drag on our economy and are harming USA competitiveness”

Sen. Orrin Hatch (R-UT) Says that members of the Finance Committee are frustrated, but that the issue needs to be dealt with as a matter of USA competitiveness. Senator Hatch said: I am greatly concerned about these corporate inversions…I believe the best way to solve this problem is to reform our corporate and national tax law in a manner that will make our multinationals competitive against their foreign counterparts…That would mean, among other things, a significant reduction in the corporate tax rate and major changes to make our tax system more competitive” – Easy to see he wants to favor For Profit Corporations in the USA ever more.

TAX RATE REDUCTION IN THE USA is the main target of the Republican congressional Reps; Democrats on the other hand, are looking for ways to augment tax revenue. Given the adversarial/ intractable divide between the USA political parties, no change can be anticipated in the near future. Folks, we are talking about huge “Lobbying contributions” that will continue to stagnate/prevent change. It is unfortunately true that “we have the best government that money can buy” The USA Treasury Department holds little hope of congressional action; accordingly, it is looking into how to slow inversions by the diligent application of using existing tax laws. They want to seem optimistic/diligent, but we know better that to expect them to succeed, they have few successes to brag about. It’s hard to estimate how much a rule change could affect the government’s tax revenue bottom line. Estimates vary broadly over the course of a decade. Some think the USA stands to gain $20 billion in revenue if most new inversions are prevented. We think it would be much higher. Sigh!-wish it were so! In Texas we have an old-timer’s advice: Dance with the one that brung you! You fatcats know exactly what that means!

Thanks to America-Aljazeera for their quotes.


Edward Oliver Gonzalez (gonzedo)




August 14, 2014 at 1:30 AM Comments (2)