Storia dell'articolo

Questo articolo è stato pubblicato il 15 luglio 2014 alle ore 16:09.
L'ultima modifica è del 15 ottobre 2014 alle ore 14:10.


To be sure, strategic rather than tax considerations drive corporate mergers and acquisitions. The recent surge in cross-border M&As to a seven-year high is the result of ample cash, strong balance sheets, cheap financing, and buoyant stock markets. But tax considerations play a major role in corporate decisions regarding how acquisitions are financed and where a merged entity is located. Large balances of foreign earnings are available to many US firms to finance their foreign acquisitions, and the competitive disadvantages of the US corporate tax system militate against locating the merged entities in the US.

Though American officials rail against inversions as unpatriotic, they are an efficiency-enhancing response to the flaws in the corporate tax system. As the prospects for corporate tax reform deteriorate, cross-border mergers with redomicilation are becoming an attractive option for many of America’s most competitive global companies. And the pressure on other companies to follow suit as more inversion deals are done.

Under current law, US companies can move their legal headquarters abroad for tax purposes by buying a smaller foreign company as long as the acquired company’s shareholders end up owning at least 20% of the combined company. To discourage inversions via cross-border M&A, President Barack Obama’s administration and several Democratic members of Congress have that would increase that percentage to at least 50%.

Moreover, a merged foreign company would be treated as a US company for tax purposes (regardless of share ownership) if its management and control functions and a substantial share of its economic activity – sales, employment, or assets – are located in the US. If enacted, the legislation would apply these new conditions retroactively to inversions occurring from May 2014.

Such policies will not address the underlying causes of inversions, will add to the widely acknowledged distortions in the corporate tax regime, and are likely to have negative unintended consequences. To meet the tougher new ownership requirements, US companies might respond by breaking up their business units into smaller pieces – reducing their market value and the returns to their shareholders and workers. Likewise, to meet the tougher new management and control conditions, US companies might respond by shifting more of these functions, and the jobs and investment (especially in research and development) associated with them, to foreign locations.

The proposed anti-inversion measures would also make it more likely that US companies are the target, rather than the acquirer, in cross-border M&A deals. Corporate tax reform should make the US a more attractive place for business activity; threatening US corporations with tougher rules on cross-border M&A and retroactive tax increases will have the opposite effect.

The US should learn from the British example. In 2008, several large UK companies threatened to redomicile in Ireland because of its lower corporate tax rate. The British government responded by from 28% to 20% by 2015; introducing a territorial tax system that exempts UK-based companies’ foreign earnings from domestic taxation; enacting a patent box that provides a 10% corporate rate on patent-related income; and adopting a new 10% non-incremental, refundable R&D tax credit. So far, these innovations appear to be attracting companies, investment, R&D, and jobs to the UK.

Bold and prompt US action to reform the corporate tax system is essential. Sadly, that is not likely in a deeply divided Congress in an election year.

Laura Tyson, Chair of the President’s Council of Economic Advisers under Bill Clinton, is Professor of Global Management at the Haas School of Management, University of California at Berkeley, and an economic adviser to the Alliance for Competitive Taxation, an independent group of US companies committed to corporate tax reform.

Copyright: Project Syndicate, 2014.


Dai nostri archivi