Even the President could no longer ignore Taxavoidination

Posted in Culture of Lickspittle at 1:45 pm by George Smith

Merging offshore in a country with an rigged economy engineered for corporate tax cheating is the new hip for the riches. So much so, it’s spawned articles in the major media, enough that the Obama White House apparently decided it could no longer stand to be seen doing nothing.

From today’s New York Times:

In letters sent to four lawmakers, Treasury Secretary Jacob J. Lew said the administration supported a quick fix that would halt the trend of so-called inversions, in which United States companies buy a smaller competitor and reincorporate overseas to save money on taxes.

Since May, Minneapolis-based Medtronic agreed to acquire Covidien for $43 billion, and Pittsburgh-based Mylan agreed to acquire assets from Abbott Laboratories. Both companies plan to reincorporate in Europe as part of the deals. AbbVie, based in Chicago, won preliminary approval on Monday from the Irish drug maker Shire for a $53 billion deal that would be the biggest of the year.

But if congressional leaders act, these deals could be in jeopardy. Many of the recent inversion deals include clauses that would allow the buyer to back out of the deal if the laws change to prevent them from reincorporating abroad.

The administration appears to believe that potentially scuttling these deals would be worth pushing through immediate changes to stop inversions.

The bad news is that the administration is offering the carrot of a reduction in taxation to 20 percent to our corporate multi-mega-cheats.

In any case, the Republican Party would never allow anything to threaten the tax avoidance of corporate America.

In fact, one might count on a different proposal, one to lower the tax rate even below 20 percent and to simultaneously further ease offshore tax avoidance.

In a white paper pointed to earlier, economist and Nobel laureate Joseph Stiglitz writes of the American corporate tax rate:

“[American corporations] recognize that public spiritedness will not induce them to pay their fair share of taxes or to create jobs in the US.
Only bribes will do that. So they seek to lower the corporate income tax
rate and to impose taxation only on production in the US.”

Stiglitz recommends seven steps, the first of which is “Raise the corporate tax rate.” Note to Obama administration: “Raise” is not spelled l-o-w-e-r.

This is to be coupled with “tax credits for corporations which invest in the US and create jobs.”

The rest are here, an interlocking of penalties and disincentives set to change the environment in which corporate America has gamed the system.

Also worth reading, most for standard shamelessness in behavior, is a piece on the “patriot” CEO of one of the pharmaceutical firms planning a tax evasion move.

The reader may note one does not usually think of American titans of business as patriots in 2014, particularly those that are the
leaders of giant generic drug firms.

Nevertheless, from the Times:

Heather Bresch grew up around politics. Her father is Joe Manchin, the Democratic senator from West Virginia and a former governor. She has heard him say repeatedly, “We live in the greatest country on Earth,??? as he did in countless political advertisements. And it appeared to rub off on her: Ms. Bresch was named a “Patriot of the Year??? in 2011 by Esquire magazine for helping to push through the F.D.A. Safety Innovation Act.

Ms. Bresch is the chief executive of Mylan, the giant maker of generic drugs.

But on Monday, Ms. Bresch announced plans to renounce her company’s United States citizenship and instead become a company incorporated in the Netherlands, where the tax rates are lower…

Still, there’s something morally disconcerting about a company like Mylan, which is a beneficiary of United States taxpayers who pay for Mylan’s drugs through Medicaid and Medicare, leaving the country, in part, to pay less in taxes…

President Obama has proposed a top corporate rate of 28 percent, and a rate of 25 percent for manufacturers. However, that number would appear to be too high to hold on to the likes of Ms. Bresch. Even 20 percent — some Republicans have floated that number — might still be too high.

One might assume the White House has read the articles in the Times and decided to cave on the original 28 percent, moving it in the direction more likable, but still too high, for predatory corporate America.

Which, unfortunately, isn’t surprising.

As for being a patriot, if it’s Esquire magazine that did the awarding, it certainly must be so.

The partial biography of a patriot, from Wiki:

Bresch, the daughter of West Virginia U.S. Senator and former West Virginia governor Joe Manchin, earned her undergraduate degree from West Virginia University.[2] She was an MBA student at West Virginia University until 1998. In 2007, the Pittsburgh Post-Gazette reported that Bresch claimed to have an MBA degree from West Virginia University, but that when asked the university disputed that. Soon after, the university awarded her an MBA despite her having completed only 26 of the required 48 credits. Following release of a report commissioned by the university (and written by a panel of faculty members from WVU and other universities), the university announced in April 2008 that it would rescind Bresch’s degree …

Michael Garrison, WVU President at the time [Bresch said her degree was “awarded” by allowing the substitution of business experience for missing credit hours], was reported to be “a family friend and former business associate of Bresch”[13] and a former consultant and lobbyist for Mylan.

Another newspaper, in West Virginia, is particularly scornful of Heather Bresch. The word patriot doesn’t come up.

Naturally, I know I can depend upon you to do your patriotic duty and click on “Taxavoidination”, the busking and hot sauce rendition.

In a slightly related matter, it would seem I need a new category tag for this kind of thing. White it is Culture of Lickspittle material, particularly in its description of bootlicking for the benefit of American business, it could use another catch-all, too. Any clever suggestions?

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