Why Are American Companies Bailing on the Homeland? Lower Taxes
In the past 10 years, 47 companies have transferred overseas for lower tax rates, compared to only 29 in the previous twenty years.
Now more than ever, American companies are deserting the U.S. for nations with more attractive tax law.
Fresh researched has identified 47 companies over the past decade who have actually transferred their headquarters overseas to take advantage of lower rates. Corporate behavior like this has recently come to be referred to as “inversion”
To qualify for the lower taxes, a company needs to do more than just move a business overseas and don a new address: companies have to initially assimilate with a company in the lower-tax country and then either do at least a quarter of their work overseas or offer the owners of the overseas company at least one-fifth ownership of the newly-merged business.
Just 29 firms used inversion to transition to a lower-tax nation the previous 2 decades, according to the Congressional Research Support service analysis.
Regulators and other legislation have tried to develop stricter requirements for inversion over the years – especially after prominent corporations like Fruit of the Loom, Seagate and Tyco shifted some or all their production/operations to locations like Bermuda and the Caymans.
The full story can be read on CNN Money.