Former Chief of Staff for the congressional Joint Committee on Taxation (JCT), Edward Kleinbard, writing in the Wall Street Journal, argues that “tax inversions must be stopped now.”
Kleinbard may understand taxes but like so many on the left has a weak grasp on economics and on the proper relationship between a government and its citizens (including those operating within corporations).
Tax inversions involve an American company buying a foreign firm in order to move its tax domicile to the lower-tax foreign location. Some of the most common recent inversions involve buying Irish companies.
For example, Medtronic, a Minneapolis-based maker of medical devices (especially pacemakers), is buying Covidien which has its tax domicile in Ireland — a country with a 12.5 percent corporate tax rate as compared to the U.S. rate of 35 percent — before the average 4.1 percent state tax rate for a statutory rate of 39.1 percent, the highest in the industrialized world. According to the Minneapolis Star-Tribune, “Medtronic Inc. could avoid $3.5 billion to $4.2 billion in U.S. taxes on funds it holds overseas” as a result of the transaction.
Kleinbard isn’t the only critic of these transactions.
Please read the entirety of my article for the American Spectator here:
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