We all know about the famous Supreme Court decision that said corporations should be treated like people. It’s too bad that this ruling doesn’t apply to U.S. companies that give up their citizenship in order to cut their taxes while remaining in this country and benefiting from all it has to offer.
When it comes to tax citizenship, corporations don’t want to be treated like people. Well-off U.S. citizens have to pay an exit tax when they give up their citizenship. But well-off U.S. companies that change nationalities for tax purposes don’t have to pay any sort of exit fee.
Hillary Clinton, to her credit, is proposing to apply an exit fee to companies that do corporate inversions. But tax expert Bob Willens said that her proposal won’t work for the new breed of corporate desertions (my term, not Willens’s) involving the likes of Pfizer and Johnson Controls. These are growing rapidly, and are far worse for U.S. taxpayers than conventional inversions — and those transactions are bad enough.
Here’s the deal. When a U.S. citizen or “long-term resident” with a net worth of $2 million or more decides to give up his or her citizenship or U.S. residency status, the Internal Revenue Service collects an exit fee. That fee is calculated by treating everything this “covered expatriate” owns as having been sold at fair market value the day before citizenship is surrendered. That triggers a capital gains tax.
Read more: Washington Post
Allan Sloan is a columnist for The Washington Post. He is a seven-time winner of the Loeb Award, business journalism’s highest honor. View Archive