If Pfizer Avoids U.S. Taxes By Buying AstraZeneca, Will Congress Be Forced To Act?
If Pfizer Avoids U.S. Taxes By Buying AstraZeneca, Will Congress Be Forced To Act?
Corporate tax inversion is a process in which a large U.S. company re-incorporates itself overseas in order to reduce the tax burden on income earned aborad. Currently U.S. law allows companies to reincorporate to another country if 20% of their shares are transferred overseas. The move is seen by some as a tax dodge, and by others as a way to circumvent an unfavorable U.S. corporate tax rate. While tax inversion is beneficial for the parties involved in the deal, the government doesn’t like the idea of all that cash being held outside of the country, untaxed. There has been a debate about the best solution to the problem – should the corporate tax rate be lowered to encourage overseas profits to be repatriated, or should the government raise the 20% threshold to make tax inversion unattractive?
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