Steven Rattner: Don't Tax Corporations, Tax Shareholders
Saturday, 03 May 2014 10:58 AM
By Dan Weil
The recent wave of corporate
merger activity partly stems from U.S. companies' efforts to lower
their tax burden, says Steven Rattner,
chairman of Willett Advisors, which
manages former New York Mayor Michael
Bloomberg’s personal assets.
U.S. companies are seeking to buy foreign ones and then change
their legal residence to an overseas address, thus avoiding U.S. corporate
taxes that can total up to 35 percent. Since 2008, about 25 U.S. companies
have done these "inversions," Rattner, a former Obama administration
official, writes in The New York Times.
"These days, tax avoidance
feels like a full-fledged business strategy, with American citizens as the
losers," he says. They lose because of the shrinking tax revenue.
So what should be done?
"At a minimum, Congress
should embrace the president’s recent proposal to both restrict the use of
inversions and tax a merged company as an American company if it is managed in
the United States
and has substantial business here," Rattner writes.
A more radical idea "would be
to scrap our unworkable corporate tax system altogether [ending corporate
taxes] and instead tax shareholders, first by eliminating low tax rates on
capital gains and dividends." Higher taxes on the wealthy are part of the
idea too.
The growth of inversions may
indeed lead to policy changes. "The more deals get done, the more
attention and scrutiny there is," Jennifer DiNucci, a
mergers-and-acquisitions lawyer with Cooley LLP, told The Wall Street Journal.
"The topic of inversions is a
lightning rod for the broader debate about U.S. tax policy."
Steven Rattner
Steven L. Rattner
is a friend of Mayor Michael R.
Bloomberg, the chairman for Willett
Advisors LLC, a director at the New
America Foundation, was a trustee at the Brookings Institution (think tank), and a funder for Demos.
Note: Willett
Advisors LLC manages Michael R.
Bloomberg’s investments.
Foundation
to Promote Open Society was a funder for the New America Foundation, the Brookings Institution (think tank),
Demos, the Harlem Children's Zone, and the Robin Hood Foundation.
George Soros
was the chairman for the Foundation to Promote Open Society, and a benefactor
for the Harlem Children's Zone.
Michael R.
Bloomberg was a benefactor for the Harlem
Children's Zone, a donor for the Robin
Hood Foundation, and the former New York (NY) mayor.
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