Now, you can obviously see why many consider companies doing this to be tantamount to a betrayal of their country. But you have to take into consideration the price of doing business as an American company. According to USA Today, the U.S. has the highest corporate tax rate in the industrialized world at a staggering 35%.
That’s not to say U.S. corporations don’t have a big advantage operating here in America. Corporations get the strength of the American dollar, the stability of our economy, the vast availability of services our infrastructure offers and access to our skilled labor pool. So that’s the argument for why corporate inversion is some kind of evil being perpetrated by corporate America.
But that really isn’t the whole story.
I’m going to ask you to think of a corporation as a person for a moment. Yes, I know that might infuriate some people, but this has nothing to do with political fundraising, it’s only to help illustrate the problem with the U.S. tax rate.
Say you’re an individual that makes lamps. You make about a dollar profit per lamp. After paying 35 cents in taxes (your 35% rate), that 65 cents you take home per lamp is just enough to pay your bills and keep a roof over your head. You’re as competitive as you can be at your current lamp price – if you sell lamps for any less, you’re out of business, bankrupt, game over…
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