Tax Inversions Allow Corporations to Avoid State Taxes

Source: Elaine S. Povich, Stateline, July 21, 2014

American companies that merge with foreign competitors to lower their federal taxes also cut their state taxes, leaving states to mostly watch helplessly as their tax revenue drains away. There has been a rash of companies buying up foreign competitors and then moving their “parent” company to the foreign site, a tactic known as “tax inversion.” The maneuver, which has become particularly popular among health care companies, puts pressure on other corporations to follow suit or be left at a competitive disadvantage. …