There’s been some interesting news of late about recent moves by U.S. companies to avoid paying taxes in this great nation of ours.
I’m referring, of course, to the fact that U.S. telco Windstream has decreased its tax bill significantly by reclassifying the bulk of its copper and fiber optic lines as real estate – and to the fact that in late July the IRS gave this practice its blessing.
I’m also talking about the rise of inversion, which involves U.S. companies purchasing foreign companies and then moving their businesses (in legal terms, anyway) to the home countries of the acquired where tax rates are lower than in the U.S. of A.
The good news here is that businesses never stop innovating and looking for ways to benefit themselves and their investors.
The not so good news is that this kind of thing means the U.S. loses out on those important tax dollars at a time in which the country is still clawing its way out of the post-recession era.
But the news that businesses continue to find new ways to avoid the cost of doing business in the U.S. is really not news at all. The inversion and Windstream efforts (which, reports suggest, other companies are almost certain to join in on) are just the latest in a long string of moves by select U.S. businesses to take advantage of the benefits the U.S. has to offer while taking their money elsewhere.
If such moves are legal, many business people would probably agree, these organizations would be remiss not to take steps to save big bucks in an effort to be more competitive, retain and potentially create jobs, and build value for their stockholders. Indeed, one article recently referred to the U.S. tax code as an albatross around the neck of businesses, and noted that the federal government is expected to tighten tax laws in the near future.
So, certainly, such moves can add up for businesses.
Whether these tax avoidance moves are patriotic or good for the country at large, however, is another question.
Executive Editor, TMC
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