Chasing Corporations Out Of The U.S.
By ROBERT J. HERBOLD AND SCOTT S. POWELLPosted 06:16 PM ET
Unemployment is foremost on everyone's mind today. Yet jobs can continue to leave the U.S. because of the threat of new taxes, the convergence of technology, the ease of digital collaboration and ready access to abundant foreign engineering talent.
Multinational corporate executives may have to move R&D, product development, management and manufacturing overseas when there is no longer a comparative advantage to staying in the United States. A shocking thought for sure, but it's the new reality.
After Japan, the U.S. has the world's highest corporate tax rate, and there is seemingly no willingness by Washington to bring rates down.
In fact, the Obama administration recently proposed taxing the foreign profits of U.S.-based multinationals even when those profits were not repatriated, but backed away when executives threatened to move offshore. Obama aides acknowledge that the administration has set aside the idea for now, but plans to revisit it in a broader tax overhaul sometime next year.
This ambiguity and the threat of new taxes from Washington, such as cap-and-trade, have already prompted 11 major U.S. companies to move offshore in the past year.
Tyco International, Foster Wheeler, Weatherford International, Nabors Industries, Noble Corp., TransOcean International, United America Indemnity, Cooper Industries, Covidien, Ingersoll-Rand and Accenture have all completed or taken steps to change their domicile of incorporation, with Switzerland and Ireland as the most popular relocation destinations.
Commenting on his company's decision, an Accenture board member asked, "What shareholder would ever vote to incorporate in a country that taxes your worldwide income?" |
