In 1992, according to then presidential candidate Ross Perot, “the giant sucking sound” was the flow of U.S. jobs to Mexico under NAFTA. Arguably, the 2008 sucking sound is the flow of capital and corporate ownership out of the U.S. The latest: InBev’s purchase of Anheuser-Busch
Excerpted from the WSJ, “This Bud’s for Belgium”, August 3, 2008
Politicians and Wall Streeters are starting to ask why the Belgian beer company InBev purchased Anheuser-Busch and not the other way around … though shareholders were the big winners here with a $50 billion-plus takeaway.
But here’s the real question: Was the takeover basically financed by the savings … from escaping America’s increasingly uncompetitive corporate tax system? … Bottom line: InBev (pays Belgium) around 20% of its profits in corporate taxes … (versus) Anheuser-Busch’s U.S. rate 38.4%.
The country will continue to see its competitive edge wither away without a corporate tax rate cut. Mr. McCain … wants to cut the corporate tax rate to 25%, close to the global average. Senator Obama is more interested in raising tax rates than cutting them.
Wall Street dealmakers tell us to expect more sales of U.S. companies to European rivals thanks to the combination of America’s higher corporate taxes and the weak dollar … the U.S. is pricing itself out of the market as a corporate headquarters. “America’s 35% corporate tax rate is … just bad economics”.
For full editorial:
http://online.wsj.com/article/SB121770579562707543.html?mod=opinion_main_review_and_outlooks
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Observations
1. Compounding the weak dollar and high corporate tax rates is the massive transfer of wealth to the oil producing nations and their sovereign wealth funds.
2. Rhetorical question: what’s the likely impact of a windfall profits tax on U.S. based oil companies?
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