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Tax inversion deals highlight the need for tax code reform in the U.S.

  • If Pfizer is successful in acquiring U.K.-based AstraZeneca, its plan to redomicile there will save it millions in corporate taxes. The tax arbitrage scheme, called an inversion, creates a holding company in the foreign country with the lower tax rate. Britain's corporate tax rate is 21% (20% next year) which is substantially lower than the U.S.'s top rate of 35% (up to 40% when state and local taxes are included).
  • About 24 U.S. companies have employed this strategy since 2008. Ireland, Canada, Switzerland and the Netherlands are also popular destinations for redomiciling.
  • According to Reuters, many of the m&a deals this year have been driven, at least in part, by tax inversions.
  • Predictably, investment bankers are working feverishly to generate deals in various industries that take advantage of the loophole before Congress acts to close it.
  • Some lawmakers say that the best solution is to reform the U.S. business tax code.
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Comments (2)
  • aleksDgreat
    , contributor
    Comment (1) | Send Message
     
    http://www.fairtax.org is the right tax system USA should have & capital gains should be 10% flat across the board (long+short term capital gains)..Corporations should have a tier system of a fair rate but when you go above a certain profit, your tax goes up by .05% or 1/4th each time it earns a certain amount. They'll still be very profitably but they won't hurt on the small increase unlike citizens who actually FEEL THE PAIN of tax increases!
    1 May, 11:30 AM Reply Like
  • stevendaniels
    , contributor
    Comment (1) | Send Message
     
    Yes, we should reform the U.S. business tax code.
    First and foremost, we should make it imposable for businesses to show that they have no profits for the year. The only way to do this is to get rid of taxing net income. The time has come to tax gross income.

     

    Next, through appropriate regulation, we have to make it a great disadvantage, to take part in re-domicile schemes.

     

    Wealthy individuals and wealthy corporations seem to, not understand the fact, that if the middle-class is lost, they will eventually lose their wealth.

     

    Steve Daniels
    Lexington, MA
    stevendaniels@hotmail.com
    1 May, 01:38 PM Reply Like
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