Scores of US multinational companies have recently changed their tax base outside the US to escape the high tax rate here and this trend is threatening billions of dollars in tax revenue which is worrying the US treasury.
Moving headquarters of multinationals to another country is a practice called inversion and it allows a significant reduction in the company tax rate. One nation which has become the most popular repository of headquarters is Ireland, which has a 12.5 percent corporate tax rate. This has made the country the newest and most popular tax haven of choice and the trend has not abated.
The companies don’t stop doing business in the US, in fact they load the domestic business with debt further lowering what US taxes are paid. The US tax rate is presently 35 percent and there is a move in Congress to lower it to 28 percent as an incentive to bring back corporate tax dollars.
US pharmaceutical companies paid a tax rate of less than 6 percent over $100 billion of Irish profits in the last decade.
Jeffrey Newman represents whistleblowers