The corporate tax rate in the USA is 35%. Way too high.
The WSJ’s Political Diary asks,
Was the takeover basically financed by the savings Anheuser expected from escaping America’s increasingly uncompetitive corporate tax system? According to the Tax Foundation, Belgium’s corporate tax rate is 33%, but the effective tax rate can be half the nominal rate thanks to adjustments for something the OECD calls a “notional allowance for corporate equity.” Bottom line: InBev was paying around 20% of its profits in corporate taxes, compared to Anheuser-Busch’s rate of 38.4%.
Things have gotten pretty bad when U.S. companies relocate to Europe to cut their tax payments. But a research analysis by Morgan Stanley finds the combined company’s corporate tax bill will be lower than in the U.S. and that the tax differential indeed figured into the economics of the sale.
Anhouser-Busch won’t be the last one:
New data from the OECD for 2008 indicate that the international average for corporate tax rates fell by another percentage point last year, meaning the U.S. is pricing itself out of the market as a corporate headquarters.
As the article says, “Things have gotten pretty bad when U.S. companies relocate to Europe to cut their tax payments.”
If Obama wins, they’ll get a whole lot worse.
Today’s WSJ’s Five Best psychological crime novels, selected by Andrew Kavlan:
Another extraordinary psychological novel: Trollope’s masterpiece The Last House at Allington, which is also available in the Amazon Kindle edition:
I don’t own a Kindle but would like feedback from anyone who currently uses it.
Today’s shoes: Lilly Pulitzer’s Gal Bronze sandals, not the usual pink and green Lilly,