Carl Icahn, the billionaire investor known for picking fights with corporate executives, is now aiming his financial might at leaders in Congress who he says aren’t doing enough to fix a broken U.S. corporate tax system.
Icahn plans to put $150 million into a new super-PAC that would push for legislation to discourage so-called tax "inversions," in which U.S. companies renounce their legal citizenship to lower their tax bills. In a letter posted on his website today, Icahn said the government should lower U.S. corporations’ taxes on earnings abroad, which would largely remove the incentive to invert.
“If the exodus is allowed to continue, there will be disastrous consequences for our already fragile economy,” Icahn said in the letter. He said he planned to encourage others to contribute to the super-PAC.
Icahn’s effort aligns with a position of Republican presidential candidate Donald Trump, whom Icahn endorsed last month. Trump, who has also called for changes that would remove the incentive for inversions, has mentioned Icahn as a potential Treasury secretary.
Icahn addressed his missive to the leadership of each Congressional chamber, as well as to members of their tax- writing committees.
“The PAC we have started will leave no stone unturned to find out who is most responsible for this ridiculous and unconscionable situation,” Icahn wrote. He endorsed a tax proposal put forth by Senators Chuck Schumer and Rob Portman and called for it to be included as part of a highway funding bill now working its way through Congress.
Icahn has a net worth of about $22 billion, according to the Bloomberg Billionaires Index, built over decades of buying stakes in companies and pushing for changes to improve their performance.
As Icahn points out in his letter, his tax proposal would affect not only companies considering inversions, but virtually all multinational firms incorporated here, because so many of them stockpile their foreign earnings abroad rather than return the money to the U.S. and pay as much as 35 percent tax. He said companies are currently holding $2.2 trillion abroad that could otherwise be invested in the U.S.
Most companies with foreign earnings, Icahn says in the letter, “would be willing to pay a 5 percent to 10 percent incremental tax on this money.”
Among the companies with billions in foreign earnings is Apple Inc., one of Icahn’s biggest current investments. Icahn has been calling for Apple to return more earnings to shareholders, an effort that is hindered, in part, by the international tax rules. Icahn didn’t mention Apple in the letter.
© Copyright 2023 Bloomberg News. All rights reserved.