Monday, September 22, 2014
The Obama Administration Issued Today Anti-Inversion Restrictions; Where is the Outrage Over Pabst, TRW Automotive, Dresser Rand, Sigma Aldrich, and Even GE Appliances?
My earlier blog on August 11, 2008 focused on the economic folly of the demagoguery against “inversion” corporate mergers to lower United States corporate taxes. (“The Insidious Inversion Perversion: An Exercise in Economic Ignorance”). The anti-inversion campaign is a continuation of the Obama Administration’s fairly successful 7 year class warfare campaign. They continue to wage it because it resonates with a significant segment of voters. I pointed out that U.S. corporations could simply sell out to foreign corporations, causing long term damage to the economy. The real corporate headquarters will now be overseas, with a substantial loss of high paying executive jobs. Corporate tax payments to the Treasury will fall substantially since the survivor corporation will only pay corporate income taxes on the United States earnings. The previous headquarters city will suffer a loss in taxes, employment, and civic involvement in the community. The new corporation will not have the same interest in contributing to the cultural and academic institutions of its former home. The Obama Administration issued today through the Department of the Treasury regulations designed to limit inversion mergers. The proposed inversion merger of Burger King with Canada’s Tim Hortons was too much for the Obama Administration to swallow. As with past attempts to limit inversion mergers, the corporate attorneys will find ways around these new regs, which might not even be legal. The solution to inversion is to lower the corporate tax rates to a competitive level with countries, such as Canada or Ireland. No outcry has been raised against the recently announced takeovers of large American companies by foreign concerns. Germany’s Merck (not the American Merck) announced today the acquisition of St. Louis based Sigma-Aldrich Corp. for $17 billion. The $97 billion Siemens Company of Germany announced yesterday the acquisition of Houston Based Dresser-Rand Corporation and its $3 billion in sales for $7.6 billion. It was announced last week that Pabst Brewing Company, along with it brands of Old Milwaukee, Colt 45, Schlitz, Lone Star, Rainier, and Old Style, was being sold to a Russian company, Oasis Beverages. Pabst now joins the three larger beer companies, Anheuser Busch (Belgium), Millers (South Africa) and Coors (Canada) in being foreign owned. Germany’s ZF Friedrichshafen, AG agreed on September 15 to acquire TRW Automobile Holding Corporation of Livonia, Michigan. TRW is one of the largest American auto parts company. Michigan can hardly afford to lose another pillar of the auto industry. Finally, it’s not a merger, but GE agreed to sell its appliance business to Electrolux, a Swedish company. Electrolux already owns the previously American brands of Frigidaire, Gibson, Kelvinator, Philco, Tappan, and White Westinghouse. American jobs will be cut as Electrolux consolidates its United States appliance operations. Not an outcry; Not even a peep from the Obama Administration which professes to be concerned about saving American jobs and preventing the loss of tax revenues through tax maneuvers. Cheap politics; bad economics!
Posted by binder'sblog at 11:28 PM
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