Arguendo that the law NY PML Sec 109 says closed on "Easter Sunday", then Miles D White would argue that means closed on both Roman Catholic Easter Sunday and Greek Orthodox Easter Sunday? What sayest Miles D. White?
Opinion
Ignoring the Facts on Corporate Inversions
Don't believe absurd claims about companies abusing the tax code or being unpatriotic.
July 17, 2014 7:06 p.m. ET
'I never let the existence of facts cloud my
judgment." This comment was made to me years ago by a colleague at
McKinsey & Company during a debate where his facts were wrong, but
his opinion firm.
That remark sums up the debate about corporate inversions, deals in which companies reincorporate overseas. My company,
Abbott Laboratories,
ABT +1.98%
announced this week that we would sell a portion of our generics pharmaceuticals business to
Mylan Inc.,
MYL +0.91%
which will organize their new firm in the Netherlands. U.S. drug maker
AbbVie
ABBV +2.60%
is working out a similar deal with the Ireland-based Shire, and
many other companies have recently announced similar "inversion" deals.
The
raging debate about these decisions has been absurd, and people
expounding on the topic are making wild claims that inversion is an
abuse of the tax code, cheating and unpatriotic. It all makes for
emotional and dramatic headlines and debate but ignores the facts.
First,
inversion is legal. Period. It's allowed in the tax code. The tax code
even specifies the terms and conditions under which it may be done.
Reference 26 U.S. Code Section 7874.
Getty Images/iStockphoto
Inversion doesn't change a company's
tax rate. A company pays the same tax rate in the U.S. after inversion
as it does before inverting. A company also pays the same tax rates in
foreign domiciles before and after inversion.
Inversion
does not relieve any pre-existing tax burden. It does not reduce the
tax that any company would ultimately have to pay on past earnings
overseas that have been deferred under the U.S. tax system.
The
tax law today views overseas earnings that have not been repatriated as
part of the U.S. tax system, regardless of whether a company has
inverted. Therefore, those past foreign earnings, if repatriated to the
U.S., are still subject to full U.S. taxation.
What
does change after inversion is a company's access to its future foreign
earnings generated outside of the U.S. tax system. Those future
earnings may be used for any capital allocation purpose the company may
have, including investment in the U.S., without the additional U.S.
repatriation tax. Foreign taxes will have already been paid on those
profits earned outside the U.S. It is the additional repatriation tax,
imposed by high corporate tax rate in the U.S., that is not paid after
inversion.
It is important to note that
the U.S. has the highest corporate tax rate in the world at 35%, while
the tax rates in countries with territorial systems, where our
competitors are based, are in the mid-20s or lower.
The
U.S. is among only a handful of countries, and the only one in the
Group of Seven, that taxes companies on world-wide earnings rather than
the earnings in their home domiciles. It's a double whammy: the highest
rate, by far, and it's applied worldwide.
In
terms of global competitiveness, the U.S. and U.S. companies are at a
substantial disadvantage to foreign companies. Taxes are a business
cost. Our disproportionately higher tax rate puts foreign companies at a
huge advantage competitively, and their lower tax burden amounts to a
subsidy that encourages them to acquire American businesses.
Furthermore,
the U.S. enjoys the lower prices of products sourced from overseas.
Mylan CEO
Heather Bresch
explained this on CNBC on Monday. Half of the generic medicines
prescribed in the U.S. come from foreign manufacturers, which have
numerous cost advantages, including a lower tax rate. Can you imagine
the sales rep of any American company in any business suggesting that a
customer in the U.S. should be willing to pay more for a product from a
U.S. company because our tax rate is higher and it's patriotic to do so?
Legislation
to block inversion is not tax reform. It would make the U.S. even less
competitive globally. It would not stimulate economic recovery. It's an
attempt to trap U.S. companies in an outdated and globally uncompetitive
tax code that would benefit from fact-based, thoughtful, comprehensive
reform.
Inversions are legal. Not abuse.
Not cheating. To those spouting the histrionic rhetoric in opposition
to inversion, I would suggest that some consideration of the facts would
better inform your judgment, which might be more productively directed
at how to make the U.S. and U.S. companies more globally competitive,
including thoughtful and balanced reform of the tax code.
Mr. White
is chairman and chief executive officer of Abbott Laboratories.
HI-
Thanks for
the help. The item’s below. I’d be happy to mail you a copy,
if you give me a mailing address.
Claude
Solnik
(631)
913-4244
Long
Island
Business News
2150
Smithtown Ave.
Ronkonkoma, NY 11779-7348
Home > LI
Confidential > Stop
scratching on holidays
Stop scratching on holidays
Published: June 1, 2012
Off Track Betting in New York State has been racing into a crisis called shrinking revenue. Some people have spitballed a solution: Don’t close on holidays.
New York State Racing Law bars racing on Christmas, Easter and Palm Sunday, and the state has ruled OTBs can’t handle action on those days, even though they could easily broadcast races from out of state.
“You should be able to bet whenever you want,” said Jackson Leeds, a Nassau OTB employee who makes an occasional bet. He added some irrefutable logic: “How is the business going to make money if you’re not open to take people’s bets?”
Elias Tsekerides, president of the Federation of Hellenic Societies of Greater New York, said OTB is open on Greek Orthodox Easter and Palm Sunday.
“I don’t want discrimination,” Tsekerides said. “They close for the Catholics, but open for the Greek Orthodox? It’s either open for all or not open.”
OTB officials have said they lose millions by closing on Palm Sunday alone, with tracks such as Gulfstream, Santa Anita, Turf Paradise and Hawthorne running.
One option: OTBs could just stay open and face the consequences. New York City OTB did just that back in 2003. The handle was about $1.5 million – and OTB was fined $5,000.
Easy money.
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