Wednesday, September 24, 2014

Bill Clinton Defends Corporate Tax Inversions at CGI

While Democrats in Congress have been trying to make a campaign issue about corporate tax inversions, and the administration has begun to take action, former President Bill Clinton is defending them:
“Like it or not, this inversion, this is their money,” Mr. Clinton said in an interview during the Clinton Global Initiative in New York.
When asked whether inversions — the practice of American companies acquiring a small overseas rival and reincorporating abroad to lower their tax bills — are unpatriotic, as many critics say, Mr. Clinton said that publicly traded companies, in particular, “feel duty bound to pay the lowest taxes they can pay.”
“We have the highest overall corporate tax rates in the world, and we are now the only O.E.C.D. country that also taxes overseas earnings,” Mr. Clinton said. “A lot of these executives, even if they wanted to bring the money home, they think this is crazy.”
Although the corporate tax rate in the US is 35% on paper (or 39.2% when you add in state taxes), the average effective corporate tax rate for large, profitable companies was only 12.6% in 2010. Because of a variety of tax credits, exemptions, and evasions, practically no corporation pays that highest rate. In fact, some even end up with a negative effective tax rate because of all of the perks offered by Uncle Sam. 

It's not surprising that Bill Clinton would be so fond of corporate executives. CGI is pretty much just a way for him to claim humanitarianism while hanging out with rich people (and helping his friends enrich themselves). This is, of course, the president of NAFTA and of the repeal of Glass-Steagall.
The question then is whether Hillary, viewed as the presumptive frontrunner for the Democratic nomination in 2016, is on the same page as her husband or the party. Given her post-State career, I'd guess the former.

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