Miles White, chairman and CEO of Abbott Laboratories, has had enough of the myths about so-called “inversions” in which businesses incorporate in countries with lower tax rates than in the U.S. — where the corporate tax rate of 35 percent is the highest in the world. In this Wall Street Journal piece, he explains the facts.
The U.S. is among only a handful of countries, and the only one in the Group of Seven, that taxes companies on world-wide earnings rather than the earnings in their home domiciles. It’s a double whammy: the highest rate, by far, and it’s applied worldwide.
In terms of global competitiveness, the U.S. and U.S. companies are at a substantial disadvantage to foreign companies. Taxes are a business cost. Our disproportionately higher tax rate puts foreign companies at a huge advantage competitively, and their lower tax burden amounts to a subsidy that encourages them to acquire American businesses.
Furthermore, the U.S. enjoys the lower prices of products sourced from overseas. Mylan CEO Heather Bresch explained this on CNBC on Monday. Half of the generic medicines prescribed in the U.S. come from foreign manufacturers, which have numerous cost advantages, including a lower tax rate. Can you imagine the sales rep of any American company in any business suggesting that a customer in the U.S. should be willing to pay more for a product from a U.S. company because our tax rate is higher and it’s patriotic to do so?
Unfortunately we are living in a time when facts are often ignored by people who want more and more of other people’s money in order to grow government.
Thankfully, here in North Carolina, the legislative fiscal reformers haven’t allowed liberal rants and mud-slinging to stop them from making sure North Carolinians of all income levels keep more of their own money.