With the Obama administration, issues are addressed either the right way or the Obama way and many times, those methods are not congruent. In the latest move by the IRS to thwart efforts by U.S. companies to avoid taxation by merging with foreign-based firms, specific rule changes have been announced making inversion much more difficult to support.
These rule changes have been instituted to make it harder for U.S. companies to qualify for tax inversion status through the use of “hopscotch” loans and the manipulation of ownership percentages of the foreign subsidiaries..
For years now, major U.S. Corporations have been moving abroad to avoid high U.S. corporate tax rates. The government’s response has been and continues to be raising of tax rates. What the Obama administration seems reluctant to recognize is that U.S. Corporations have an obligation to its stockholders that far exceeds its obligation to serve as a piggy bank for a government with an insatiable need to spend.
As both sides play a game of financial chess on the world’s biggest chessboard, the losers in all of this are the American workers. The U.S. workforce has been shrinking as a result of jobs going abroad. Corporate leader Igor Cornelsen has time and again requested competitive tax rates in America to eliminate the need to move.
Unfortunately, these cries are falling on deaf ears.
As the IRS initiates these attacks on U.S. corporations acting in the best interests of its stockholders, a line is being drawn in the sand that is ultimately going to require Congressional intervention. What a waste of time.