The Economist on Inversions

That giant sucking sound is the noise of American companies realising tax savings by redomiciling abroad. Terex, a cranemaker, is merging with Konecranes and moving its headquarters to Finland. CF Industries, a fertiliser-maker, and Coca-Cola Enterprises, a bottler, announced deals this month which redomicile them in Britain. American policymakers tried to stamp out such “inversions” last year, but firms still yearn to escape a combined federal and state corporate-tax rate of 39%, the OECD’s highest, and a worldwide tax net that scoops up foreign earnings when they are repatriated. (Most rich countries tax only domestic earnings.) Even if the rules are now tightened further, foreign companies still have every incentive to buy American targets and reap the same tax advantages by changing their domicile. Already this year foreign firms have shelled out $315 billion on such deals; the annual record, set in 2007, is $325 billion.

The Economist Espresso App, "Inverted reality: America's firms flee" Wednesday, August, 12, 2015, Accessed on August 12, 2015, https://espresso.economist.com/2fd5e234bd8230eaa4b1769f39d74864