American companies looking to lower tax bills by moving their headquarters abroad have been criticized in recent weeks. Most prominently, Walgreen Co. is deciding whether it will purchase a European drugstore chain, enabling the company to relocate to Europe and pay a lower tax rate.
Jim Kane, CEO of Kane & Co. and Chair of the Chicagoland Chamber of Commerce Taxation Forum, wrote an op-ed that was published in the Chicago Tribune last week arguing that the U.S. tax code is to blame for tax inversion, not companies that are well within their legal rights.
From the Chicago Tribune op-ed:
The blame for the current rash of inversions rightfully should be assigned to the U.S. tax code. Our federal tax code incentivizes American companies to substantially reduce their tax liability by relocating their corporate headquarters outside of the U.S.
American corporations contemplating an inversion strategy are not “deserters,” and the choice of that word in the title of the proposed legislation is insulting to law-abiding companies. Rather, the federal (and state, for that matter) tax code is the demon here. Were the tax code designed to encourage corporate expansion and job creation, foreign corporations would find the United States an attractive option for expansion, growth and headquarters relocation.
Click here to read the full op-ed.