Making Sense of the Corporate Inversion Craze

Abstract: Tax Inversion is a recently rekindled offshore profit sheltering strategy that has come under attack by the United States government with accusations of tax evasion and lack of “economic patriotism.” While these cross-border M&A transactions are currently legal under the U.S. Internal Revenue Code, the increase in companies being re-domiciled to lower tax-rate countries points to a bigger issue than tax revenue collection. This more fundamental question concerns whether or not an overhaul of America’s convoluted and loophole-riddled tax code is needed in order to prevent its businesses from leaving its shores. In this post, I attempt to illustrate the current tools being used to combat inversion deals in addition to how this issue may be resolved going forward. 

Author: Jacob Romeo is a third-year in the College, majoring in Economics.


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