Summary of “Competitiveness” Has Nothing to Do With It

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More and more US multinationals are undertaking corporate inversions – transactions in which a large firm becomes a “nominal subsidiary” of a smaller foreign company in a tax-friendly jurisdiction. Generally, companies structure such deals so that they can shelter income in a low-tax country. American corporations claim that these transactions are necessary if they are to remain globally competitive in a high US tax environment, but such assertions are “almost entirely fact free,” according to professor Edward D. Kleinbard. His rigorous examination of often-tedious tax rules contrasts with his fiery debunking of corporate complaints. getAbstract recommends Kleinbard’s intriguing, lively take on a timely topic – particularly as the White House moves to curtail inversions – to CEOs, legislators, and others with an interest in reforming the US corporate tax code and keeping American tax dollars in the United States.

In this summary, you will learn

  • Why US multinationals carry out corporate inversions,
  • Why corporate claims that high US taxes drive them to inversions reportedly ring false, and
  • How legislators can impede corporate inversions and bring tax revenue back to the United States.
 

About the Author

Edward D. Kleinbard is a professor of law and business at the USC Gould School of Law.

 

Summary

Why Inversions Take Place
In a corporate inversion, a large company acquires a smaller, publicly held foreign company that is based in a tax-friendly nation. This practice has become popular among large American companies. The US firm structures the deal so that it becomes a “nominal subsidiary...

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