Banks Cash In on Inversion Deals Intended to Elude Taxes

[boutons_deux]

Jamie Dimon (http://topics.nytimes.com/top/reference/timestopics/people/d/james_dimon/index.html?inline=nyt-per), the chief executive of JPMorgan Chase (http://dealbook.on.nytimes.com/public/overview?symbol=JPM&inline=nyt-org), recently said, “I love America.”

Lloyd Blankfein (http://topics.nytimes.com/top/reference/timestopics/people/b/lloyd_c_blankfein/index.html?inline=nyt-per), the chief executive of Goldman Sachs (http://dealbook.on.nytimes.com/public/overview?symbol=GS&inline=nyt-org), wrote an opinion article (http://www.politico.com/news/stories/0712/78619.html) saying, “Investing in America still produces the best return.”

Yet guess who’s behind the recent spate of merger deals in which major United States corporations have renounced their citizenship in search of a lower tax bill? Wall Street banks, led by JPMorgan Chase and Goldman Sachs.

Investment banks are estimated to have collected, or will soon collect, nearly $1 billion in fees over the last three years advising and persuading American companies to move the address of their headquarters abroad (without actually moving). With seven- and eight-figure fees up for grabs, Wall Street bankers — and lawyers, consultants and accountants — have been promoting such deals, known as inversions, to some of the biggest companies in the country, including the American drug giant Pfizer (http://dealbook.on.nytimes.com/public/overview?symbol=PFE&inline=nyt-org).

http://graphics8.nytimes.com/images/2014/07/28/business/sorkin-chart/sorkin-chart-superJumbo.jpg
http://mobile.nytimes.com/blogs/dealbook/2014/07/28/banks-cash-in-on-mergers-intended-to-elude-taxes/

Repugs/1% FALSELY whine, and sucker asshoels on the board, about the deficit, but will block any laws that stop deficit-increasing inversions.

Anything to fuck up govt, Repugs are for it.

[boutons_deux]

Pfizer Inc. (PFE) (http://www.bloomberg.com/quote/PFE:US) this week proposed the biggest such deal yet, a $98.7 billion takeover ofAstraZeneca Plc (AZN) (http://www.bloomberg.com/quote/AZN:LN) that would move the largest U.S. drugmaker to the U.K. for tax purposes and lower its tax rate.

“We’ve done, I think, probably all we can within the statute,” Koskinen, 74, told reporters inWashington (http://topics.bloomberg.com/washington/) today, saying the trend of corporate moves point up the need to revise the U.S. tax code. “We try to make sure people are within the bounds, but if they’re within the bounds, if they play according to the rules, then they have a right to do that.”

Koskinen’s remarks show the limits of the government’s ability to respond without Congress and suggest that the Obama administration won’t make a regulatory move to stop or limit so-called corporate inversions.

Pfizer would join at least 19 other companies making or contemplating similar transactions, includingChiquita Brands International (CQB) (http://www.bloomberg.com/quote/CQB:US) Inc. and Omnicom Group (OMC) (http://www.bloomberg.com/quote/OMC:US) Inc., the largest U.S. advertising firm.

http://www.bloomberg.com/news/2014-04-30/treasury-said-to-favor-crackdown-on-tax-lowering-moves.html

[CosmicCowboy]

OMG!

Business men being rational and fleeing from the country with one of the highest corporate tax rates in the world?

It is actually driving mergers that make no sense except for tax purposes.

[boutons_deux]

OMG!

Business men being rational and fleeing from the country with one of the highest corporate tax rates in the world?

It is actually driving mergers that make no sense except for tax purposes.

Bullshit.

Businesses/investors being greedy sons of bitches.

The percentage of federal tax revenues for corporations is lowest among ALL industrial countries.

http://www.taxpolicycenter.org/briefing-book/background/numbers/images/The-Numbers-Jan-2012-International_1.gif

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Ostensibly, the U.S. federal tax code requires corporations to pay 35 percent of their profits in income taxes.

But of the 275 Fortune 500 companies that made a profit each year from 2001 to 2003 and for which adequate information to draw conclusions is publicly available, only a small proportion paid federal income taxes anywhere near that statutory 35 percent tax rate. The vast majority paid considerably less.

In fact, in 2002 and 2003, the average effective tax rate for all of these 275 companies was less than half the statutory 35 percent rate. Over the 2001-2003 period, effective tax rates ranged from a low of -59.6 percent for Pepco Holdings to a high of 34.5 percent for CVS.

Over the three-year period, the average effective rate for all 275 companies dropped by a fifth, from 21.4 percent in 2001 to 17.2 percent in 2002-2003.

The statistics are startling:


Eighty-two of the 275 companies, almost a third of the total, paid zero or less in federal income taxes in at least one year from 2001 to 2003. In the years they paid no income tax, these companies earned $102 billion in pretax U.S. profits. But instead of paying $35.6 billion in income taxes as the statutory 35 percent corporate tax rate seems to require, these companies generated so many excess tax breaks that they received outright tax rebate checks from the U.S. Treasury, totaling $12.6 billion. These companies’ “negative tax rates” meant that they made more after taxes than before taxes in those no-tax years.
Twenty-eight corporations enjoyed negative federal income tax rates over the entire 2001-2003 period. These companies, whose pretax U.S. profits totaled $44.9 billion over the three years, included, among others: Pepco Holdings (-59.6 percent tax rate), Prudential Financial (-46.2 percent), ITT Industries (-22.3 percent), Boeing (-18.8 percent), Unisys (-16.0 percent), Fluor (-9.2 percent) and CSX (-7.5 percent), the company previously headed by current Secretary of the Treasury John Snow.
In 2003 alone, 46 companies paid zero or less in federal income taxes. These 46 companies told their shareholders they earned U.S. pretax profits in 2003 of $42.6 billion, yet they received tax rebates totaling $5.4 billion. Almost as many companies, 42, paid no tax in 2002, reporting $43.5 billion in pretax profits, yet receiving $4.9 billion in tax rebates. From 2001 to 2003, the number of no-tax companies jumped from 33 to 46, an increase of 40 percent.
In 2001, the Treasury paid corporations $40 billion in tax refunds, a third more than the 1998-2000 average.
Then in 2002 and 2003, after the law was changed to expand tax subsidies and make it easier for corporations to carry back excess tax breaks to earlier years, corporate tax refunds skyrocketed to an average of $63 billion a year – more than double the 1998-2000 average.
?

http://reclaimdemocracy.org/real_tax_rates_plummet/

and those are old numbers. the corporate tax scam has gotten much worse in recent years.

Repugs just voted to cut corporate taxes by $300B over next 10 years.

[CosmicCowboy]

Yet, democrats and Boutons are against tax simplification where rates are decreased and loopholes (bought with congressional donations/influence) are eliminated.

[boutons_deux]

democrats and Boutons are against tax simplification

You Lie

The tax system is overcomplicated, opaque, requiring High Priests (expensive self-serving lawyers, accountants) to decipher it because wealthy special interests bought it that way to protect/enrich themselves.

[Th'Pusher]

Yet, democrats and Boutons are against tax simplification where rates are decreased and loopholes (bought with congressional donations/influence) are eliminated.

List the democrats opposed to simplifying the tax code.

[CosmicCowboy]

List the democrats opposed to simplifying the tax code.

You can start with Harry Reid.

[Th'Pusher]

You can start with Harry Reid.
So the house passed a bill to reform the corporate tax code and Harry Reid refused to bring it up for a vote?

[Th'Pusher]

You can start with Harry Reid.
So the house passed a bill to reform the corporate tax code and Harry Reid refused to bring it up for a vote?

[boutons_deux]

You can start with Harry Reid.

Harry Reid on Tax Reform


http://www.ontheissues.org/economic/Harry_Reid_Tax_Reform.htm