Obama’s War on Corporate Deserters
The president continued to chastise theses specific entities by stating, “Even as corporate profits are higher than ever, there’s a small but growing group of big corporations that are fleeing the country to get out of paying taxes.” Central Democrats have presented bills to harness corporate inversions by swelling foreign ownership to 50% or more, if a company chooses this route and keeps management control in the United States. The proposal was included in the president’s budget offered in early spring.
“They’re technically renouncing their U.S. citizenship, they’re declaring their base someplace else even though most of their operations are here. You know some people are calling these companies ‘corporate deserters,’ the president added. The issue is getting a lot of attention as the mid-term elections advance. It is a perfectly legal tax-avoidance strategy, but one that Obama and many Democrats find indefensible. Republicans counter that businesses are justified in taking logical steps to enhance profitability in the wake of high U.S. corporate tax rates and say the government should keep out of the way.
To put the issue into perspective, the U.S. corporate tax rate is the highest in the world. American companies currently face upwards of triple their competitors’
Independent studies have shown what would happen to the U.S. economy if the effective corporate tax rate paid by S&P 500 companies dropped to Switzerland’
The conundrum at hand is a tricky situation, as a business owner and author of an award winning and bestselling book, Sell Your Business For More Than It’s Worth, I am always looking for ways to decrease the amount of capital that flows out of mine and my client’s business. As an American, I understand the benefits of confining U.S. companies to their original soil, for the purpose of job creation and the like. Our government must find a balance between lowering the taxes for these businesses and keeping a leash on the corporations eager to take advantage of the system.
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