There's been a great deal of press lately to reflect the allegations, mostly from "progressives", that corporate inversions are inherently wicked. Were these "progressives" being uncharacteristically honest they would admit that their objective is to extract more tax dollars from corporations, thus enabling those "progressives" to "earn" more votes through targeting the spending of those taxes.
It is, in a word, nonsense. A corporate inversions is simply reincorporating in a non-U.S. nation in which that company also does, or will do, business. The objective IS driven by tax policy in the U.S., however. A U.S.-based company is taxed on all earnings, even those generated outside of the U.S. once that money is brought back into the U.S.; this is referred to as "repatriation". So, naturally, companies wish to avoid paying our country's very high corporate tax rates so they often don't repatriate foreign funds. And that has "progressives" salivating over the prospect of yet more "other people's money" waiting to be wasted.
By incorporating outside the U.S. companies can use earnings as they choose and can even decide to bring the money to the U.S. for investment here, without paying our taxes (on funds that have already been subject to taxation by the nation in which the earnings were generated. In a recent Wall Street Journal article, the Chairman and CEO of Abbott Labs, presents a cogent, rational, and factual case FOR inversions. He notes...
Inversion doesn't change a company's tax rate. A company pays the same tax rate in the U.S. after inversion as it does before inverting. A company also pays the same tax rates in foreign domiciles before and after inversion.
The respected Tax Foundation has also spoken out against the misinformation being bandied about by uninformed or duplicitous "progressives", and offers supporting comments on the Abbott position.
If there's any doubt that this is just another phony issue, concocted by "progressives", let's look at the impact of addressing this issue. A recent piece in The Federalist noted that the Congressional Joint Committee on Taxation estimates that "fixing" the inversion issue would generate $2 Billion/year. Even that relative pittance is likely overstated since it assumes that 100% of all funds would be repatriated; that's an absurd assumption. http://bit.ly/1jVhnPH.
As with much of today's political debate, corporate inversion is surrounded by so many lies and misrepresentations--all designed to backdoor yet more corporate tax dollars at the expense of our free market--that effort is too often expended on getting to the baseline of fact and truth. "Progressives" are simply wrong on this issue, and have been dishonest in presented their case.