U.S. burdened by ‘tax inversion’

An editorial from The Exponent Telegram

CLARKSBURG, W.Va. — The issue of companies working to avoid corporate taxes in the U.S. has become a major concern, one that needs to be addressed.

The practice of U.S.-based companies merging with an overseas company or otherwise establishing an overseas presence has been coined “tax inversion” as corporations work to avoid what they term this country’s high corporate tax structure.

Notably, the latest to capitalize on the practice are pharmaceutical companies, including Mylan, which has locations in Morgantown as well as its headquarters in Pittsburgh.

By purchasing Abbott Laboratories’ generic line and organizing the company in the Netherlands, Mylan will see its overall corporate tax fall from 25 to 21 percent in the first year and to the high teens eventually, The Wall Street Journal reports.

Likewise, other pharmaceutical companies are joining the parade of those attempting to minimize taxes. Salix Pharmaceuticals of North Carolina purchased Cosmo Technologies of Italy and moved the new company to Ireland.

Reports indicate the move will lower Salix’s rate from 30 percent to the low 20 percent range.

These efforts are permissible under current law as long as the shareholders of the foreign corporation own 20 percent of the stock.

The practice of corporate tax inversion has drawn harsh words from President Obama and other lawmakers. The practice will cost the U.S. billions in tax dollars each year.

But there needs to be more than words…

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