Abbott Labs CEO defends tax inversions in Wall Street Journal
- In a July 17 op-ed for the Wall Street Journal, Abbott CEO Miles White defended tax inversions, noting that they are neither illegal nor an abuse of the tax code.
- Tax inversion is allowed in the tax code with specifics in Reference 26 USC section 7874.
- White makes the point that a company’s tax rate does not change as a result of inversion, nor does it relieve any preexisting burdens.
White points out that many of the claims about tax inversions give rise to “emotional and dramatic headlines and debates, but ignore the facts.” For instance, White explains that a company pays the same tax rates in foreign domiciles before and after tax inversion. Overseas earnings that have not been repatriated are still part of the US tax system. The major difference with tax inversion involves a company’s access to future foreign earnings, which a company may use for any capitol allocation it has, including investment in the US without a repatriation tax.
White notes that the US corporate tax rate -- an average of 35% -- is the highest in the world. Other countries' tax rates hover in the mid-20s. The US is also the only G7 country that taxes a company’s worldwide earnings. White encourages tax reform to make US companies more globally competitive.