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Tags: Zuckerman | corporate | tax | inversions

Mort Zuckerman: Cut Corporate Tax Rate, Limit Inversions

By    |   Wednesday, 17 September 2014 12:33 PM

Much hue and cry has arisen over the explosion of tax inversions.

Those are deals in which U.S. companies buy foreign ones and then move official headquarters overseas to avoid U.S. corporate taxes, which, at a maximum federal rate of 35 percent, are among the highest in the developed world.

To Mortimer Zuckerman, executive chairman of Boston Properties and editor-in-chief of U.S. News & World Report, a solution isn't difficult.

Editor’s Note:
5 Shocking Reasons the Dow Will Hit 60,000


"How about marrying a lower corporate rate — 30 percent, say — with restricting inversions to cases where it is a genuine business move?" he writes in the Financial Times.

"A company could still be subject to U.S. taxes if management control remains in America and 25 percent of its employees, sales or assets stay there."

Companies that aren't doing much of their business in the new foreign headquarters shouldn't be allowed to move overseas for tax purposes, Zuckerman says.

"It would also be silly to allow U.S. corporations to acquire a foreign company and just use its address to claim tax status," he writes.

"One way to control this is to require shareholders in the foreign company to own at least 50 percent of the new entity, compared with 20 percent at present."

Meanwhile, Harvard economist Greg Mankiw recommends repealing the corporate income tax and scaling back the personal income tax to combat tax inversions.

"We can replace them with a broad-based tax on consumption," he writes in The New York Times. "The consumption tax could take the form of a value-added tax, which in other countries has proved to be a remarkably efficient way to raise government revenue."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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Much hue and cry has arisen over the explosion of tax inversions.
Zuckerman, corporate, tax, inversions
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2014-33-17
Wednesday, 17 September 2014 12:33 PM
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