An editorial from The Dominion Post
MORGANTOWN, W.Va. — It’s not that Mike Puskar didn’t understand corporate
inversion.
It’s a tax technique — read: Loophole — that few in corporate circles don’t understand.
An American firm takes over a foreign company, reincorporates there and avoids paying U.S. taxes on foreign-earned profits.
This year nine U.S. companies have undergone inversion.
Recently, Mylan Laboratories began that process in a buyout of AbbVie — Abbott Laboratories’ international division.
It’s not that we don’t understand its underlying value to Mylan and its stockholders, either.
Aside from the economic benefits of this cross-border merger, it’s also legal —black and white.
But does that make it right? Red, white and blue, you know?
Well, it is red, white and blue, that is, if you’re pledging Mylan’s loyalty to the Netherlands’ red, white and blue tricolor.
We understand the global economy, too. American companies invest there and foreign nations invest here.
Yet, when major U.S. companies pursue mergers to lower their tax bill here, that’s not right.
These companies will not be paying for the benefits and services of being located in this country, yet will continue to use them.
They’ll still have access to our infrastructure and our schools, not to mention our markets.
Some have called for a reform of the corporate tax system, starting with slashing corporate income-tax rates, which have stood at 35 percent since 1993.
That debate does need to happen in Congress and we are not opposed to adjusting this tax rate.
However, the issue before us here is closing this tax loophole. A loophole that will cost our universities, our roads and our parks billions.
By historic standards, the U.S. corporate tax rate is low. That rate was more than 50 percent as recently as the 1950s.
Is the current tax rate on U.S. corporations causing poor economic performance? Last time we looked, corporate profitability is at an all-time high.
Calling for changes to slash rates is not going to help pay down that federal budget deficit, either.
Why does our corporate rate dwarf the Netherlands’ or Ireland’s? It could have something to do with our nation’s military budget and the terrible costs of war.
But that’s what patriotism and sacrifice will get you.
Mike Puskar also understood patriotism and sacrifice.
In his vernacular, “He had your back.”
Did he act in his company’s own interest? Absolutely.
But did he ever do so knowing such a tax avoidance strategy would cripple his country and its economy?
No. He had his employees’ backs. He had this community’s back. He had this state’s back.
And he had his country’s back.
