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The Invasion Of The Inversion

Aug 28, 2014
by Caroline Miller
Allan Sloan, inversions, Positively Un-American, Standard& Poors, tax evasion by corporations
4 Comments

Recently, I wrote that if corporations are people, they need to be better Americans. (blog 8/15/14)  They need to pay their taxes, for example.  Allan Sloan’s new article in Fortune explains one way some companies are shirking their duty.  (“Positively Un-American,” by Allan Sloan, Fortune, July 21, 2014, pg. 70.)

 The strategy they use is called an “inversion.”  Inversions come in two flavors.  1) An American company buys a foreign one then moves its headquarters abroad so it can shed its U.S. tax obligations. 2) A private American corporation – one not publically traded on a stock exchange – spins off part of its enterprise.  Next it moves that branch  to a foreign country where the tax burden is lower and takes it public.  When they do business in the United States, they avoid paying taxes because, technically, the spin-off has never been in America.  (Ibid, pg. 64)

 Corporations defend inversions saying they have a mandate is to maximize value for their shareholders.  Tax avoidance is one way to enhance value.  Meanwhile these companies do  business with our government through a number of lucrative contracts.  According to the U. S. treasury, if the  trend continues, our government will lose approximately 20 billion dollars over the next 20 years. 

 In the past, businesses that used inversions to dodge taxes couldn’t be listed on the Stand and Poor Stock Exchange (S&P) .  But the policy changed 4 years ago because the exchange feared their competitors wouldn’t be so finicky.  (Ibid pg. 66)  Today there are 28 “non-American/ American” companies trading on the S&P.

The 20 billion dollars our country is projected to lose would, as Sloan points out, be “enough to cover what Uncle Sam spends on programs to help homeless veterans and to conduct research to create better prosthetic arms and legs for our wounded warriors.” (Ibid. pg 68.)   Senator Carl Levin has offered proposals to close some of these loopholes but they haven’t gone anywhere in Congress. It looks as if the American taxpayer will be asked to make up the loss.

  When there is an income tax, the just man will pay more and the unjust less on the same amount of income.  (Plato)

Shell Game

Courtesy of www.ramblingbarbara.com

 

 

 

 

 

 

 

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4 Comments
  1. bill Whitlatch August 28, 2014 at 9:24 am Reply
    Gives "Love it or Leave it" a whole new dynamic. What a "Whooper"
    • Caroline Miller August 28, 2014 at 9:31 am Reply
      I love the irony of pulling up an old conservative mantra and using it against them. You always entertain, Bill.
  2. Christine Webb August 28, 2014 at 9:30 am Reply
    Thank you for writing so clearly, Caroline Miller. I am not clever enough to ever become a corporation, or hopefully will never become so greedy as to do so. Corporations are allowed to create inversions to add to the coffers of their shareholders at the expense of all those who could benefit from the taxes they are not required to pay. Why does our government continue to do business with these companies? Doesn't anyone have a plan in mind that would be just for all? Has the desire for wealth amongst those who could facilitate change, trumped all?
    • Caroline Miller August 28, 2014 at 9:57 am Reply
      There have been a couple of proposals floated in the Congress but they aren't going anywhere. I suspect without public outrage nothing will happen, which is why I discuss these musty topics in my blog. Thank you for your reply. As this blog is available around the globe, it helps for those outside the United States to know how the average American is feeling about issues like inversion and other current topics. Your comments contribute to their understanding that what happens on Wall Street or Washington D.C. doesn't always reflect how Main Street feels.

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Contact Caroline at

carolinemiller11@yahoo.com

Portland, Oregon author Caroline Miller had distinguished careers as an educator, union president, elected official and artist/advocate.

Her play, Woman on the Scarlet Beast, was performed at the Post5 Theatre, Portland, OR, January/February 2015

Caroline published a serialized novelette, Marie Eau-Claire, on the website, The Colored Lens.  She also published the story Gustav Pavel,  a parable about ordinary lives, choice and alternate potential, on the website Fixional.co.

Caroline has published four novels

  • Ballet Noir
  • Trompe l’Oeil
  • Gothic Spring
  • Heart Land

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