President Obama will deliver a speech today railing against corporate inversions. That is the process whereby a U.S. business merges with a foreign business and moves the new joint business’s headquarters to the foreign country. Inversions have been a hot topic recently because well-known businesses such as Walgreens, Pfizer, and Medtronic have been looking to engage in the process.
The president, like others before him, decried this practice because he believes it displays a lack of patriotism. However, inversions have nothing to do with love of country. They are all about U.S. businesses keeping up with their global competition.
When a U.S. business inverts it continues paying the same amount of tax it always has on its U.S. income. Any business, no matter where headquartered, pays the 35 percent U.S. corporate tax rate – which is the highest corporate tax rate in the world — on income earned within our borders.
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