Reprinted from Campaign For America's Future
Major US companies are moving abroad to avoid high corporate taxes. It's called corporate inversion and results in higher profits for shareholders.
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Politicians often don't know about a problem -- never mind fix it -- unless people organize and make their feelings known. When you sign an online petition, send an email and especially donate to a cause, it can make a real difference. In the case of companies "renouncing their citizenship" in order to dodge their taxes, it really did work.
You probably heard that companies like Burger King and others were "renouncing their citizenship" as a scheme to get out of paying taxes they owe us. They were using a complicated transaction called an "inversion" to make it seem like these U.S. companies were not U.S. companies. To make it simple, they would buy a non-U.S. company, then claim that the non-U.S. company was the "parent" company. Then they would claim they no longer had to pay certain U.S. taxes, including taxes on already-made, non-U.S. profits they were hoarding outside the U.S.
A company called AbbVie was preparing to do one of these inversions, to get out of paying its U.S. taxes. In September the Obama administration introduced new rules cracking down on these companies. The administration was responding to the public outcry that was generated by organizations like Campaign for America's Future and others, including our online petitions.
Then last month AbbVie cancelled the tax-dodging inversion deal. AbbVie had billions of already-booked profits stashed outside the U.S., and would have been able to get out of paying the taxes it owed. But the new rules from the Obama administration would make them pay the taxes they owed, so they cancelled the deal. The New York Times reported, "The unraveling of the merger came swiftly, just weeks after the Treasury Department announced new rules taking aim at inversion deals. [...] In announcing the termination of the deal, AbbVie lashed out at the Obama administration for changing the rules so abruptly."
Explaining Complex Issues
One of the things that helps giant corporations get away with various forms of tax-dodging like an inversion is that most people have a hard time making their way through the complexities involved. At CAF we work to explain these complexities in ways more people can understand. We've been writing and writing about corporate inversions and other schemes, explaining how they work and what is wrong with them. Other publications like The Huffington Post, AlterNet, Truthout, Daily Kos, Crooks and Liars and others have carried our work.
CAF posts explaining inversions, the Walgreens and Burger King inversions and general offshore tax-dodging schemes included:
- Who Gets Rich Harvesting Burger King and the American Economy?
- Is Walgreens Trying To Leave The U.S.?
Victory for Americans: Walgreens Won't "Invert" to Avoid U.S. Taxes
- 5 Giant Un-American Corporations Trying to Bolt U.S. to Avoid Taxes (Written for AlterNet)
- Are American Corporations Really Less Competitive Because Of Taxes?
- Polling Shows Democrats Should Campaign On Corporate Patriotism
- A Simplified Way To Tax Multinational Corporations
- Perhaps We Need Corporate 'Loyalty Oaths'
Corporate Tax Deferral, Inversions And The Destructive Result
- Our Solution To Burger King-Style Abandonment Of U.S. Gains Traction