It’s not just American tourists heading overseas these days. Increasingly, U.S. corporations are turning to “tax inversions” to move abroad and avoid high corporate tax rates.
Minneapolis-based Medtronic recently bought a company domiciled in Ireland to save as much as $4.2 billion on overseas profits, and Walgreen’s is considering a move to Switzerland.
Arizona State University professor Donald Goldman told Stateline that inversions are becoming more common because investment bankers are advising companies to do it to remain competitive.
“(In) the drug industry, everybody’s doing it or at least exploring doing it.”
So what about Indiana’s highest-profile drug company? Eli Lilly CEO John Lechleiter is pushing for tax reform instead.
“The current U.S. tax system puts U.S. companies at a disadvantage,” Lechleiter said. “Some of these companies acting on inversions ... are simply trying to level the playing field. If we’ve got a concern about inversions, we need to tackle our tax code.”
While the tax-inversion deals generally involve only finances – not jobs – Lilly’s position is good news. Indiana’s corporate income tax collections have been one of the few bright spots in recent revenue reports.