Charging Less to Make More: The Causes and Effects of the Corporate Inversion Trend in the U.S. and the Implications of Lowering the Corporate Tax Rate
Vol. 13
September 2013
Page
This article was created to examine the causes and effects of tax avoidance schemes, including the corporate inversion trend, pursued by U.S. multinational corporations (MNCs). The article explores alternative aspects of this behavior, including the effect that lowering the corporate tax rate would have on U.S. MNCs. Instead of creating patchwork legislation, such as section 7874 to the Internal Revenue Code, this article advocates addressing the underlying problems which give MNCs incentives to expatriate. By investigating the underlying problems of corporate tax legislation, this article concludes that lowering the corporate tax rate is the appropriate long-term solution for the U.S. government in order to address MNC tax avoidance. In February 2012, officials in President Obama’s administration called for a similar plan.
This article was created to examine the causes and effects of tax avoidance schemes, including the corporate inversion trend, pursued by U.S. multinational corporations (MNCs). The article explores alternative aspects of this behavior, including the effect that lowering the corporate tax rate would have on U.S. MNCs. Instead of creating patchwork legislation, such as section 7874 to the Internal Revenue Code, this article advocates addressing the underlying problems which give MNCs incentives to expatriate. By investigating the underlying problems of corporate tax legislation, this article concludes that lowering the corporate tax rate is the appropriate long-term solution for the U.S. government in order to address MNC tax avoidance. In February 2012, officials in President Obama’s administration called for a similar plan.