FORBES.- The New York Times just ran an op-ed by their editorial board decrying corporate inversions on the grounds that taking advantage of the tax code is somehow unpatriotic. The particular case that got the ire of The New York Times was Johnson Controls, the Milwaukee-based auto parts maker, selling itself to Ireland-domiciled Tyco International which will save it at least $150 million annually in U.S. taxes. The Times should be the last organization to criticize others for benefiting from the tax code.Más...
Corporate inversions classically involve a larger, American company “selling” itself to a smaller, foreign-headquartered company in order to save on taxes. The motivation is the U.S. tax code, which claims the right to tax worldwide earnings rather than just the share of corporate earnings generated in the U.S. Foreign-headquartered companies need only pay taxes on their U.S. earnings and since U.S. corporate taxes are among the highest in the world (the exact ranking depends on whether you go by the stated or effective rate).
Apparently, The New York Times believes companies should take no actions in order to lower their tax rates. In fact, the editorial makes clear that the Times is particularly incensed at Johnson Control’s maneuver because the auto bailout used taxpayer money to keep Chrysler and GM in business, indirectly benefiting Johnson Controls who sold them auto parts. At this point, I would normally launch into an explanation about how corporations have no obligation to pay taxes and that it is government’s fault if it offers companies tax breaks or leaves loopholes in the tax code.
However, I do not need to lecture The New York Times on that topic because it knows that lesson well. After all, the newspaper of record has its headquarters in a building built on land seized by the government under the power of eminent domain from ten different owners, some of whom did not want to sell, implying that the government exercise of power saved the developer money. In addition to that benefit, The New York Times also received $26 million in tax breaks in exchange for keeping jobs in New York City.