“The plan of Carl Icahn to spend $150 million in campaign money touches on the hottest debate in corporate taxation — and it’s also one that could make the financier plenty of money as well,” Steve Goldstein reports for MarketWatch.
“Icahn announced his intentions in a letter on his web site, saying he wanted to fight the ‘pernicious’ efforts by companies to merge with foreign companies to switch their tax domicile. That tactic, called an inversion, has led the country to lose over 50 companies, or at least their headquarters,” Goldstein reports. “‘If this exodus is allowed to accelerate, there will be disastrous consequences for our already fragile economy, as well as meaningful and unnecessary job losses,’ Icahn says.”
“Icahn’s preferred method of tackling inversions is corporate tax reform. He says that inversions can be fought with a one-time repatriation tax of 5% to 10%, which would encourage companies to bring the $2.2 trillion they have deposited abroad back to the U.S. Icahn said he would pair this with infrastructure spending on highways, a plan similar to one proposed by Rep. Paul Ryan, the Wisconsin Republican who leads the House Ways and Means Committee,” Goldstein reports. “Funnily enough, Icahn happens to own a big stake in one company that would benefit greatly from such a move — Apple, which has over $200 billion in cash outside U.S. shores.”
Read more in the full article here.
MacDailyNews Take: Regardless of whether Icahn would benefit or not, U.S. corporate taxes are obviously too high and desperately require reform.
Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth. – Apple CEO Tim Cook, May 21, 2013
SEE ALSO:
EU demands millions in back taxes from Starbucks and Fiat; sets up showdown with Apple – October 21, 2015
Apple tax probe won’t hurt Ireland, Finance Minister Noonan says – October 5, 2015
EU’s Vestager says will not complete tax inquiries of Apple, others in second quarter – May 5, 2015
Apple warns of potential ‘material’ financial damage from European tax probe – April 29, 2015
Ireland’s Prime Minister: Apple has nothing to fear from end of ‘Double Irish’ tax avoidance strategy – November 4, 2014
Apple says it may lose Irish tax break – October 31, 2014
Ireland to end tax lures that drew U.S. firms – October 14, 2014
EU tax probe spotlights Ireland’s allure for multinationals – October 13, 2014
EU watchdog to give reasons for inquiry into Ireland’s tax treatment of Apple – September 29, 2014
European Commission accuses Apple of prospering from illegal Irish tax deals – September 28, 2014
EU threatens expanded probe into Ireland’s tax practices regarding Apple, Googles, other companies – June 20, 2014
EU’s investigation of Apple’s taxes isn’t going to cause the company any problems – June 13, 2014
EU launches tax avoidance investigations on Apple, Starbucks, Fiat – June 11, 2014
Not in Taxes anymore: On site at Apple’s famous Irish ‘headquarters’ – November 2, 2013
Regan: U.S. tax code spurs loveless foreign corporate ‘marriages’ – May 13, 2014
Ireland to close Apple’s tax loophole, but leave bigger one open – October 15, 2013
G20 think tank OECD proposes blueprint for global crackdown on tax avoidance – July 19, 2013
Thomas Sowell on Apple, corporate taxes, and ‘the road to serfdom’ – May 28, 2013
Taxing Apple just taxes you – May 24, 2013
Don’t tax Apple, tax its shareholders – May 24, 2013
If Apple paid more tax, we might pay less or something – May 22, 2013
Apple CEO Tim Cook pounds another nail into the Keynesian coffin – May 22, 2013
Apple CEO Cook makes no apology for company’s tax strategy – May 22, 2013
Why does he look like a Vampire looking to suck somebody’s blood? 😱
I had that much money once but I pissed it all away on wine, women and song, not actually in that order.
“U.S. corporate taxes are obviously too high”
Really? If the average US citizen could get away with paying so little (percentage wise), they would be ecstatic. The median income in the US is lower than in Canada and also many other countries in the world. The US poor are even more disadvantaged BUT the very very wealthy are even more wealthy than ever and keeping it for themselves. There is very little ‘trickle down’ economics that helps the middle class in the US. All you have to do is look up the stats yourself.
You do realize, don’t you, that the profits that a company makes, known by the technical term of “dividends”, is passed on to its owners, known by the technical term of “stockholders.” Now, the corporation has already paid taxes on this money, but thanks to our idiotic tax system, the recipients of this money then get to pay income tax on their dividends. So, actually, a corporate tax rate of 0% would be an appropriate response, given that the people who get all the money still have to pay taxes on it again.
That is profoundly disingenuous. Not all publicly traded companies pay dividends to shareholders. And literally none pay all of their profits as dividends. In most cases, dividend payouts are a rather small percentage of their profits. The rest of the profits they often just keep (like Apple, amassing over $200B of it).
Shareholders profit from ownership mostly on speculation that the value of shares will increase over time.
Just the other day I was looking at a breakdown of actual tax burdens on corporations. For Biotech it is something like 5%, for computer companies it is about 10%.
it must be true, he saw it on the interwebs
How many times do we have to repeat, corporate taxes are a myth!!! In the end, it is the individual that pays – either through a lower paycheck from the taxed company or though higher retail prices. Come on guys. Wake up already!